FTX’s legal counsel faces a lawsuit action over involvement in FTX crypto fraud
Sullivan & Cromwell allegedly used its authority to help FTX executives defraud FTX’s former customers badly.
Sullivan & Cromwell (S&C) is FTX’s primary counsel firm. Before the bankruptcy of FTX exchange, this firm was helping the FTX team to deal with the legal challenges and also after the bankruptcy of FTX, this law firm played a vital role in the bankruptcy case.
On 16 Feb 2024, A lawsuit was filed by the FTX creditors against the S&C firm for its involvement in the FTX’s multi-billion crypto fraud game.
As per the filing, this law firm helped as an advisor for FTX executives in large financial transactions and internal communication.
FTX creditors also argued that the relationship between FTX and S&C was not healthy for FTX’s financial position, as this law firm paid $8.5 million in fees during the 16 months before FTX bankruptcy but after that collected over $180 million, representing 10% of its total revenue for 2022.
Now this lawsuit is going to be a very big problem for the future of this law firm, at least for its involvement in the Crypto sector.
Recently few media reports claimed that S&C is seeking to get the role of an independent monitor for Binance Holdings Ltd, an American subsidiary of top crypto exchange Binance which is currently in legal conflict with the SEC while settling the cases with the other US government agencies.
Now there are huge chances that S&C will fail to get officials permission to monitor BinanceUS crypto exchange.
On 18 Feb 2024, Bloomberg media also analysed a lawsuit in which FTX was accused of creating billions of dollars of Tether (USDT) with the help of a Bahamas-based partner bank Deltec Bank.
The lawsuit alleged that FTX’s sister firm Alameda Research was many times used to transfer funds to Deltec Bank, to create billions of dollars worth of USDT, which was unethical.
