FTX paid $12M to law firm S&C just before bankruptcy
A filing disclosed that FTX crypto exchange transferred a huge amount of funds to a NewYork based law firm just before bankruptcy filing.
FTX was a second ranked crypto exchange in the crypto space, before the first week of Nov 2022. Because of the misuse of the user’s fund by the FTX founder Sam Bankman-Fried (SBF), the exchange failed to give withdrawal of the funds to all of its users & finally on 11 Nov filed for bankruptcy in a US district court.
On 21 Dec a filing was submitted in the bankruptcy court and the filing revealed that the FTX team paid $12 Million to Sullivan & Cromwell LLP (S&C), a law firm headquartered in New York City.
S&C received these funds from West Realm Shires Services Inc on behalf of the FTX exchange. Alongside the $12 million payment, FTX paid $3.5 million in the last 90 days.
Reports noted that such a big amount paid by FTX to S&C was an effort by the FTX exchange to continuously avail the services from the law firm under any worst situation. To this date, the Law firm is holding $9 million out of $12 million.
Recently District Judge Ronnie Abrams left the FTX case because her husband works as a partner at a law firm and that law firm advised FTX in 2021. So to remain away from any kind of conflict, she left the case.
The district judge said:
“Nonetheless, to avoid any possible conflict, or the appearance of one, the Court hereby rescues itself from this action.”
Read also: US IRS still failing to define “crypto broker”
