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FTX Buyers Sue Sullivan & Cromwell, Say Legislation Agency Aided Fraud



FTX buyers sued Sullivan & Cromwell, accusing the regulation agency of aiding illicit schemes that helped advance a multi-billion greenback fraud earlier than the crypto change’s collapse.

Sullivan & Cromwell’s companies “went nicely past these a regulation agency ought to and ordinarily offers,” the investor criticism stated. “Legal professionals had been desperate to craft not solely inventive however deceptive methods that furthered FTX’s misconduct.”


The lawsuit filed Feb. 16 on behalf of a proposed class of FTX clients provides to scrutiny of the elite Wall Road regulation agency that has acknowledged engaged on 20 authorized issues for FTX and its founder Sam Bankman-Fried within the 16 months earlier than the change’s 2022 implosion amid experiences of a liquidity disaster.

MLB, Formula 1 Face Fraud Suits for Promoting FTX Cryptocurrency


Sullivan & Cromwell declined to remark. The agency has beforehand stated it had a “restricted” relationship with FTX and that it reported concerns to federal regulation enforcement after studying of the change’s issues.

The Moskowitz Legislation Agency, which is behind actions towards Tom Brady and different celeb endorsers of FTX, introduced the go well with in Miami federal courtroom. Sullivan & Cromwell “actively participated” within the FTX fraud by authorized work that gave it deep perception into the change’s inside workings, buyers allege. Agency legal professionals knew the place buyer cash was held and in regards to the “untruthful and fraudulent conduct and misappropriation” of the cash, the buyers declare.


The lawsuit makes Sullivan & Cromwell the second regulation agency to face an investor lawsuit over allegedly aiding and abetting the FTX fraud.

Fenwick & West, a Silicon Valley regulation agency which labored because the crypto change’s primary company counsel, is dealing with a separate motion together with enterprise and personal fairness companies similar to Sequoia Capital, Thoma Bravo and Paradigm.


Bankman-Fried in November was convicted of fraud and conspiracy for siphoning buyer cash into an affiliated hedge fund for dangerous investments, political donations, and costly actual property.

Embracing Crypto


Sullivan & Cromwell, based in 1879, is among the many largest regulation companies within the US. It has embraced work with entities within the digital belongings enviornment, advising Coinbase, the biggest change within the US, in its battle with Securities and Trade Fee. The agency is poised to be appointed Binance Holdings Ltd.’s impartial monitor following the change’s multibillion-dollar settlement with the US.

The agency turned an out of doors counsel to FTX in 2021 after FTX.US employed Ryne Miller as its normal counsel. In keeping with the investor criticism, Miller, who got here to FTX from Sullivan & Cromwell, instantly made it his precedence to ship enterprise to his former agency.


The issues Sullivan & Cromwell labored on included FTX’s proposed acquisition of crypto change Voyager’s belongings in chapter and regulatory representations earlier than the Commodity Futures Buying and selling Fee. The agency additionally represented Bankman-Fried in his private capability in relation to his place within the inventory buying and selling app firm Robinhood Markets Inc.

The agency’s restructuring group, led by Andy Dietderich, has since served as FTX’s primary chapter counsel, a job for which it has already billed at the least $150 million. Dietderich informed a choose overseeing the insolvency case on Jan. 31 that FTX plans to repay clients in full.


A federal appeals courtroom, nonetheless, has additionally ordered an impartial examiner to research the FTX case, citing in its determination the potential conflicts points raised over Sullivan & Cromwell’s work for the change prior the chapter.

The case is Edwin Garrison et. al. v. Sullivan & Cromwell, S.D.Fla., No. 1:24-cv-20630, 2/16/2024


{Photograph}: The FTX Cryptocurrency Derivatives Trade brand on a laptop computer display screen organized in Riga, Latvia, Nov. 24, 2022. Photograph credit score: Andrey Rudakov/Bloomberg

Copyright 2024 Bloomberg.




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