Traders within the defunct cryptocurrency trade FTX have initiated authorized proceedings in opposition to Sullivan & Cromwell, alleging that the distinguished regulation agency performed a pivotal position in facilitating illicit actions that fueled a multi-billion greenback fraud main as much as the trade’s collapse.
In a grievance filed on February sixteenth on behalf of a proposed class of FTX clients, buyers accuse Sullivan & Cromwell of offering companies that prolonged far past the scope of typical authorized illustration. The lawsuit alleges that the regulation agency actively engaged in crafting misleading methods that furthered FTX’s misconduct.
The authorized motion provides to the mounting scrutiny surrounding Sullivan & Cromwell, a famend Wall Road establishment, which has acknowledged its involvement in 20 authorized issues for FTX and its founder, Sam Bankman-Fried, within the 16 months previous the trade’s demise in 2022 amid studies of a liquidity disaster.
Regardless of repeated makes an attempt to solicit a response, Sullivan & Cromwell declined to touch upon the matter. Nevertheless, the agency has beforehand acknowledged that its relationship with FTX was “restricted” and that it promptly reported issues to federal regulation enforcement upon studying of the trade’s points.
The lawsuit, introduced forth by the Moskowitz Legislation Agency in Miami federal court docket, alleges that Sullivan & Cromwell actively participated within the fraudulent actions at FTX via its authorized work, granting the agency vital perception into the inside workings of the trade. Traders declare that the agency was aware of essential info relating to the whereabouts of buyer funds and the alleged misappropriation of mentioned funds via misleading practices.
This authorized motion marks the second occasion of a regulation agency going through litigation over its alleged complicity within the FTX scandal. Fenwick & West, FTX’s main company counsel, can also be embroiled in a separate authorized battle alongside enterprise and personal fairness corporations comparable to Sequoia Capital, Thoma Bravo, and Paradigm.
Sam Bankman-Fried, FTX’s founder, was convicted in November on prices of fraud and conspiracy for diverting buyer funds into an affiliated hedge fund, which had been then utilized for high-risk investments, political contributions, and luxurious actual property purchases.
Based in 1879, Sullivan & Cromwell is among the most distinguished regulation corporations in the US. The agency’s affiliation with FTX dates again to 2021 when Ryne Miller, now FTX US’s basic counsel, joined the trade from Sullivan & Cromwell. Since then, the agency’s restructuring group, below the management of Andy Dietderich, has performed a pivotal position as FTX’s main chapter counsel, having billed at the very least $150 million for its companies to date.
The authorized battle between buyers and former authorized representatives underscores the complexities and authorized ramifications arising from the collapse of FTX, leaving stakeholders and trade observers intently monitoring the developments as they unfold.
