- Multiple allegations of civil conspiracy and fraud are included in the case.
- Creditors claimed in a filing that S&C reaped financial benefits from FTX’s deceit.
Creditors of the defunct FTX exchange have taken legal action by suing the law firm managing the bankruptcy case in a class-action lawsuit.
Creditors of FTX claimed in a court document dated February 16 that Sullivan & Cromwell, or S&C, “actively” took part in the “FTX Group’s multibillion dollar fraud,” and that S&C reaped financial benefits from FTX’s deceit.
Multiple Allegations
It has been alleged that the company has previously received substantial compensation for its services as outside counsel to the exchange in several acquisitions, including FTX’s bid for Voyager Digital Holdings’ assets and the purchase of LedgerX. It is estimated that S&C would collect fees totaling hundreds of millions of dollars in the ongoing bankruptcy action.
Moreover, multiple allegations of civil conspiracy, fraud, and aiding and abetting fiduciary breaches are included in the case, which demands damages for each.
Ryne Miller, who was a partner at S&C until becoming general counsel at the FTX Group in August 2021, was instrumental in establishing the partnership between the two firms. Also, according to the allegations, Miller sent twenty cases from FTX to his previous legal business.
The lawsuit goes on to say that “so close was the relationship” between S&C and FTX that Sam Bankman-Fried, the former CEO of FTX, would often work out of S&C’s New York offices.
The possibility of a conflict of interest between S&C and the bankruptcy case has been previously explored. Claiming the law firm couldn’t obtain the material required to guarantee trust in any probe or results, a bipartisan group of senators in the US sent a letter to the court in January 2023 requesting an independent examiner.
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