FTX Hearing: DOJ Objects FTX’s Choice Of Attorneys, Citing Conflict Of Interest

FTX Hearing – The U.S. Trustee, in a legal filing on January 13 expressed concerns about FTX’s hiring of New York law firm Sullivan and Cromwell. Citing potential conflicts of interest from previous activity.

iexclusivenews reports that The complaint is similar to those made by a bipartisan group of US Senators and the crypto exchange’s founder, Sam Bankman-Fried.

And expresses concern that the firm may step on the toes of future work by an independent examiner.

“S&C’s disclosures as filed are wholly insufficient to evaluate whether S&C satisfies the Bankruptcy Code’s conflict-free and disinterestedness standards.” Stated Trustee Andrew Vara, a Department of Justice official responsible for bankruptcy cases. “The incomplete disclosures are a sufficient and independent reason to deny the application.”

“Any investigation led by S&C would be duplicative and wasteful of estate resources if the Court were to grant the U.S. Trustee’s pending motion to appoint an examiner with a comprehensive investigative mandate,” Vara added.

What You Should Know 

According to Vara, FTX’s General Counsel Ryne Miller previously worked for S&C for eight years.

And the law firm may find itself in the “conflicted position” of investigating both itself and its former employee.

Retaining the law firm is “necessary and in the best interests of the Debtors and their estates and stakeholders.”

According to John Ray, who was appointed FTX CEO on Nov. 11, in a Dec. 21 deposition. “S&C is one of the world’s leading law firms in all key practice areas.”

In a blog post published Thursday, Bankman-Fried stated that S&C’s relationship with FTX prior to its demise had been more than transactional.

And that its staff had pressured him into filing for bankruptcy on Nov. 11.

Echoing Senators’ concerns about the law firm’s independence expressed in a Jan. 10 letter.

iexclusivenews reports that at a hearing on Jan. 11. Judge John Dorsey stated that the letter requesting the appointment of an independent examiner into the case was an inappropriate intervention.

A request for comment from S&C lawyers was not immediately returned.