FTX Creditors Sue Law Firm Sullivan & Cromwell for Alleged Aiding in Fraud

Lawsuit Allegations

In a recent legal development, creditors of the now-defunct cryptocurrency exchange FTX have filed a class-action lawsuit against Sullivan and Cromwell (S&C), the law firm overseeing FTX's bankruptcy proceedings. Allegations suggest that S&C facilitated the cryptocurrency exchange's supposed deceptive practices, primarily due to its intimate legal advisory role.

Inside Connections

The relationship between FTX and S&C traces back to the hiring of Ryne Miller, a past S&C employee, as FTX's general counsel responsible for dealing with regulatory challenges. Miller’s role at FTX is said to have fortified the ties with S&C, which handled numerous high-value legal matters for the exchange. Notably, S&C's advisory services during the acquisition of LedgerX and the attempted purchase of Voyager Digital's crypto assets are under scrutiny.

Potential Complicity

The lawsuit paints a picture of S&C's potential complicity in FTX's questionable activities. Claims include S&C’s cognizance of a 'backdoor' allowing FTX to channel customer funds to Alameda Research and ignoring a code that prevented Alameda's auto-liquidation. Creditors are now calling for S&C to face legal repercussions for aiding and abetting fraud and conspiracy, while questioning its capacity to manage FTX's bankruptcy impartially.