Objections Raised Over Appointment of Sullivan & Cromwell as Debtors’ Counsel for FTX

On Friday, chapter choose John Dorsey accepted the legislation agency Sullivan & Cromwell (S&C) to be appointed because the debtors’ counsel for FTX, regardless of an objection from Daniel Friedberg, a former FTX US compliance officer. Throughout a Zoom presentation, Friedberg claimed there was a battle of curiosity between former and present FTX executives and FTX US’ common counsel, as Ryne Miller as soon as labored for S&C. Choose Dorsey, nonetheless, was not swayed by Friedberg’s 17-page objection and appointed S&C, stating that “there’s no proof of precise battle right here.”

FTX Chapter Raises Questions of Battle of Curiosity and Odd Choices

The day earlier than chapter choose John Dorsey accepted Sullivan & Cromwell (S&C) to signify the debtors as authorized counsel, James “Metalawman” Murphy revealed a Twitter thread explaining that it was odd that S&C would probably be chosen for FTX illustration. “There’s one thing off with the FTX chapter,” Murphy insisted in his publish. Murphy, an lawyer who focuses on metaverse, Web3, and digital asset topics, questioned the involvement of John J. Ray III, the brand new FTX CEO and chief restructuring officer, within the course of.

The lawyer Murphy factors out that when Ray labored with Enron because the chief restructuring officer, Ray did a wonderful job aggressively pursuing recoveries for the advantage of Enron’s collectors. Nonetheless, Murphy said that Ray is performing very in another way from the hard-bargaining CEO he was generally known as at Enron and questioned this alteration in angle. For instance, the metaverse lawyer detailed that when he was restructuring Enron, Ray by no means recommended for a second that considered one of Enron’s major exterior legislation companies ought to function debtor’s counsel.

“Inexplicably, Mr. Ray now helps S&C’s transfer to function debtors’ counsel,” Murphy noted. The lawyer additional stated that that is regardless of S&C dealing with “20 engagements for FTX in simply 16 months,” being “paid $8.5 million in charges,” and “representing key figures [Sam Bankman-Fried] and [Nishad Singh] personally.” Murphy remarked that at Enron, Ray “aggressively pursued claims towards Enron’s exterior legislation companies.” The lawyer continued:

Vinson & Elkins paid $30 million to settle and Andrews Kurth paid $18.5 million. In response to an impartial report, these companies failed to reply to pink flags suggesting attainable misconduct.

Murphy additionally opined that the final word irony of this case is that the large charges can be paid by the victims of the FTX fraud — the shoppers. “My prediction: The unified entrance of Mr. Ray, the Official Collectors Committee, and S&C will prevail, and the choose will appoint Sullivan & Cromwell debtors’ counsel … This isn’t regular,” Murphy concluded. Through the listening to the subsequent day, Daniel Friedberg, a former FTX US compliance officer, objected to S&C being appointed and submitted a 17-page objection for the chapter choose to overview. Within the submitting, the previous FTX US compliance officer stated that Ryne Miller, FTX US’ common counsel, was once employed by S&C.

“Mr. Miller knowledgeable me that it is rather necessary for him personally to channel quite a lot of enterprise to S&C as he needed to return there as a associate after his stint with the debtors,” Friedberg’s criticism particulars. Regardless of the objection, Chapter Choose Dorsey advised court docket contributors that “there’s no proof of precise battle right here,” including that it was “rumour, innuendo, hypothesis, rumors, and positively not one thing I’d permit to be launched into proof.”

After S&C was appointed as debtors’ counsel, James “Metalawman” Murphy added his two cents in regards to the choice. “As anticipated, the choose approves Sullivan & Cromwell as debtors’ counsel. Choose says, on the file earlier than him, he has no concern about S&C conflicts of curiosity,” Murphy wrote. “Any suspense about this choice was eradicated when the U.S. Trustee switched place to favor S&C’s appointment.” The identical day, U.S. federal prosecutors seized practically $700 million in property from the disgraced FTX co-founder Bankman-Fried.

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What do you concentrate on the appointment of Sullivan & Cromwell as debtors’ counsel for FTX and the allegations of battle of curiosity raised by former FTX US compliance officer Daniel Friedberg and James “Metalawman” Murphy? Share your ideas within the feedback under.

Jamie Redman

Jamie Redman is the Information Lead at Bitcoin.com Information and a monetary tech journalist dwelling in Florida. Redman has been an energetic member of the cryptocurrency neighborhood since 2011. He has a ardour for Bitcoin, open-source code, and decentralized purposes. Since September 2015, Redman has written greater than 6,000 articles for Bitcoin.com Information in regards to the disruptive protocols rising immediately.

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