Law Firm Thunderstorm Strikes FTX Bankruptcy: Will the Dust Ever Settle?

In the aftermath of FTX's cryptocurrency exchange collapse, questions swirl around the involvement of Sullivan & Cromwell (S&C) law firm, as highlighted in a recent exposé.

S&C Law Firm Criticized by Legal Scholars for Conflicts of Interest in FTX Bankruptcy

Legal scholars Lipson and Skeel probe S&C's actions, alleging conflicts of interest saturating FTX's bankruptcy proceedings. S&C's handling of 20 M&A and regulatory tasks for FTX, earning nearly $10 million, draws scrutiny. These ties potentially complicate S&C's oversight regarding FTX's mishandling of funds.

With founder Bankman-Fried's conviction, the appointment of John Ray as CEO, facilitated by S&C, faces criticism. Critics argue this move, alongside S&C's substantial earnings from FTX, suggests a conflict of interest.

Lipson and Skeel critique S&C for perceived breaches of confidentiality and loyalty, implicating the firm in undermining Bankman-Fried. They argue S&C's actions hinder FTX's recovery and prioritize the firm's interests over stakeholders'.

Legal Scholars Lipson and Skillen Collaborate to Dissect FTX Bankruptcy, Challenge Allegations of Misconduct Against S&C Law Firm

However, defenders point to bankruptcy court oversight and potential for stakeholder recovery, challenging accusations of unilateral wrongdoing by S&C.

The collaborative effort by Lipson and Skeel aims to dissect FTX's downfall without direct engagement with S&C or FTX, highlighting the nuanced responsibilities of legal advisors in bankruptcy cases.