A few days ago, the law firm Sullivan & Cromwell suffered a lot of criticism. Several critics, including members of the Senate, accused him of a conflict of interest in connection with FTX’s legal case. For justice, these allegations have no reason to be.
Justice has decided!
Delaware State Court Judge John Dorsey ruled on January 20 in a lawsuit filed against the law firm Sullivan & Cromwell in the FTX case. Some of the crypto firm’s creditors have accused the firm of a conflict of interest.
According to them, long before FTX filed for bankruptcy in November 2022, Sullivan & Cromwell had advised it on the acquisition of several crypto companies. They also accuse the law firm of handling certain regulatory matters on behalf of FTX. A bundle of clues which for them call into question the legitimacy of Sullivan & Cromwell. This, especially in the context of its representation of the crypto exchange. They add that these clues force the firm to prove its transparency.
After listening to the claims of each party, justice has decided. The judge’s decision is final. The “potential conflicts” do not prevent a law firm from defending a company in bankruptcy court. A judgment that implies that the law firm is no longer bound by any additional disclosure requirements.
An embarrassing episode for the FTX board?
If through this decision Sullivan & Cromwell maintains its mission of representing FTX, this incident nevertheless remains embarrassing for the legal adviser. It is indeed tarnishing its image in public opinion. The legal adviser could indeed have established his credibility prior to the legal proceedings.
James Bromley, a Sullivan & Cromwell partner who specializes in bankruptcy, acknowledged that law firms regularly omit important details when juggling multiple cases. This lack of pragmatism would explain, to a certain extent, the reactions, on social networks, of the founder of FTX, Sam Bankman-Fried. The latter has indeed criticized the firm several times on Twitter and on Substack.
Pending the opening of Sam Bankman-Fried’s trial on October 2, 2023, the FTX case probably has many surprises in store for us.
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