Post by account_disabled on Feb 22, 2024 1:28:37 GMT -5
Four days later, FTX filed for bankruptcy. Dietderich quickly arranged for Sam Bankman-Fried, the exchange's founder, to resign so that a new chief executive, John Jay Ray III, a corporate turnaround specialist, could lead the company. When Mr. Ray needed lawyers to manage the bankruptcy, a lucrative assignment, he asked a judge to appoint the same ones who had helped him get the job: Sullivan & Cromwell. With Bankman-Fried set to stand trial next month on fraud charges stemming from the FTX failure, Sullivan & Cromwell's tangled history with the exchange is drawing scrutiny, especially from lawyers and family. For months, Bankman-Fried has attacked Sullivan & Cromwell in court filings and on social media, arguing that the firm's lawyers made him a scapegoat for FTX's implosion and downplayed his own involvement in the exchange.
The dispute became even more personal this week when FTX sued Bankman-Fried's parents, seeking to recover millions of dollars and alleging that the exchange had operated as a "family Pakistan Phone Number business." Criticism of Sullivan & Cromwell has been widespread recently, as the firm has racked up more than $100 million in legal fees over the FTX bankruptcy. This summer, its lawyers clashed with representatives of FTX's millions of disgruntled creditors over the company's legal strategy and the pace of its efforts to recover billions in missing assets. "They were involved before the bankruptcy," said Sunil creditor who lost more than $2 million in the collapse. "They should have been aware of what was going on." The dispute over Sullivan & Cromwell's relationship with FTX shows the range of powerful institutions that were eager to help Bankman-Fried during his rapid rise, even as he resisted basic due diligence and eschewed traditional corporate governance.
It offers a preview of a conflict that may unfold attrial in Manhattan, where he is expected to place some of the blame for FTX's bankruptcy on Sullivan & Cromwell and a second law firm that advised him, Fenwick & West. . In court papers, Bankman-Fried's lawyers suggested they could file a so-called defense counsel to argue that those firms approved many of FTX's actions. Prosecutors have argued that the judge overseeing the trial should not allow Fried to blame his lawyers, because the founder often lied about how his company was using his money. They also said he should disclose whether he relied on the legal advice of his parents, who are longtime Stanford law professors. An FTX spokesperson said claims were "a biased story" aimed at unfairly placing blame on professionals trying to recover money. A representative for Sullivan & Cromwell declined to comment.
The dispute became even more personal this week when FTX sued Bankman-Fried's parents, seeking to recover millions of dollars and alleging that the exchange had operated as a "family Pakistan Phone Number business." Criticism of Sullivan & Cromwell has been widespread recently, as the firm has racked up more than $100 million in legal fees over the FTX bankruptcy. This summer, its lawyers clashed with representatives of FTX's millions of disgruntled creditors over the company's legal strategy and the pace of its efforts to recover billions in missing assets. "They were involved before the bankruptcy," said Sunil creditor who lost more than $2 million in the collapse. "They should have been aware of what was going on." The dispute over Sullivan & Cromwell's relationship with FTX shows the range of powerful institutions that were eager to help Bankman-Fried during his rapid rise, even as he resisted basic due diligence and eschewed traditional corporate governance.
It offers a preview of a conflict that may unfold attrial in Manhattan, where he is expected to place some of the blame for FTX's bankruptcy on Sullivan & Cromwell and a second law firm that advised him, Fenwick & West. . In court papers, Bankman-Fried's lawyers suggested they could file a so-called defense counsel to argue that those firms approved many of FTX's actions. Prosecutors have argued that the judge overseeing the trial should not allow Fried to blame his lawyers, because the founder often lied about how his company was using his money. They also said he should disclose whether he relied on the legal advice of his parents, who are longtime Stanford law professors. An FTX spokesperson said claims were "a biased story" aimed at unfairly placing blame on professionals trying to recover money. A representative for Sullivan & Cromwell declined to comment.