Sam Bankman-Fried Says Law Firm Worked Closely With FTX Before Bankruptcy

Sullivan & Cromwell was one of the two primary law firms used before the bankruptcy and was the lead law firm of FTX US, Mr. Bankman-Fried wrote in a post Thursday on Substack, an online subscription-based newsletter. There is platform.

Mr. Bankman-Fried said the law firm helped FTX and its U.S. units with some of their most important regulatory applications and concerns, as well as important transactions, and that he occasionally contacted Sullivan & Cromwell’s office in New York. Worked out when he visited. City.

He said the general counsel of FTX US was a former member of the law firm, without naming him. Ryne Miller served as a partner at Sullivan & Cromwell prior to joining FTX US in August 2021.

Law firms that wish to work on Chapter 11 cases are required under bankruptcy rules to disclose any past representations that could create a conflict of interest before they are officially retained. A spokeswoman for Sullivan & Cromwell said it had no comment beyond a statement it issued on January 10, noting that the firm “never acted as primary outside counsel for any FTX entity. Prior to bankruptcy the firm had a limited and largely transactional relationship with FTX and a few affiliates, as is common, and is disinterested as required by the bankruptcy code.

Mr. Miller did not immediately respond to a request for comment.

Mr. Bankman-Fried also said that the law firm and Mr. Miller were “the primary parties strong-arming and threatening” him into naming the chosen candidate as the exchange’s new CEO. The new FTX CEO will also be in charge of the bankruptcy process which subsequently selected the law firm as bankruptcy counsel. Mr. Bankman-Fried also alleged that the law firm rejected his efforts to raise needed liquidity that could “make all customers whole,” while pressuring him to name a new CEO and file for bankruptcy. Was.”

The allegations came after a bipartisan group of US senators, in a letter Monday, questioned whether Sullivan and Cromwell could lead an independent investigation into the collapse of FTX. The letter said Sullivan & Cromwell should disclose whether its lawyers suspected fraud at FTX or had concerns about the company’s lack of proper legal control before it filed for Chapter 11 in early November. The senators also urged US Bankruptcy Court Judge John Dorsey in Wilmington, Del., who is overseeing the FTX case, to appoint an independent examiner to review how and why FTX failed. Judge Dorsey said the senators’ letter would have no effect on their decisions.

Two of Sullivan & Cromwell’s partners, both former regulators at the US Securities and Exchange Commission and the Commodity Futures Trading Commission, were also hired to help FTX’s new CEO. check what went wrong On the exchange, The Wall Street Journal reported earlier.

Companies typically use existing law firms to handle bankruptcy filings. But the arrest of Mr Bankman-Fried and other former FTX executives has drawn MPs’ attention to Sullivan and Cromwell’s prior work for the exchange.

According to the law firm’s retention application, Sullivan & Cromwell charged FTX more than $8.5 million in legal fees for work it did for the firm prior to the bankruptcy.

Sullivan & Cromwell is also facing scrutiny from FTX creditors over its role in the bankruptcy process. FTX customer and creditor Warren Winter objected to Sullivan & Cromwell’s retention in a filing in Delaware bankruptcy court on Tuesday. Lawyers for Mr Winter, who had millions of dollars in assets in his FTX account before the bankruptcy, said in the filing that Sullivan & Cromwell is an unsuitable candidate for appointment and would undermine creditors and public confidence in the bankruptcy process. ,

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