Four American senators urged the bankruptcy judge on the FTX exchange’s case to disallow Sullivan & Cromwell law firm as the legal examiner of the case. They argued that S&C had a conflict of interests in the case, having provided legal advice to FTX before it collapsed.
Four Senators Disapprove S&C As Legal Examiner Over FTX
The Judge of the Delaware District Bankruptcy Court previously supported the motion for a legal examiner to thoroughly investigate the cause of FTX’s collapse and take full control of the resources left of the firm. Consequently, the Sullivan & Cromwell law firm was appointed as the examiner over the case.
However, a group of bipartisan senators wrote a detailed letter to the presiding Judge, John Dorsey, over the appointed examiner. The four senators included Thom Tillis, Cynthia Lummis, Elizabeth Warren, and John Hickenlooper.
In the letter, the four US senators criticized the engagement of C&S law firm as one of the examiners in the case for conflicts of interest. Hence, they demanded the bankruptcy court appoint an independent examiner who has no connections with the case to conduct a thorough investigation.
Senators John Hickenlooper, Elizabeth Warren, Cynthia Lummis, and Thom Tillis told the court that Sullivan & Cromwell was appointed examiner over the FTX case used to offer legal services to FTX before it crashed. They added that one of C&S’s partners had once served as the legal counsel of FTX.
Senators Questioned S&C’s Role In FTX’s Collapse
In addition, the bipartisan group stated that there are many controversies over S&C’s involvement in the exchange’s collapse, which needed answers. These include; to what degree S&C lawyers questioned or suspected fraudulent activities or the lack of sufficient legal restraints, the horizon of S&C’s representation of FTX, and, if not S&C, which law company did FTX appoint as the primary external counsel to the Debtors.
Furthermore, the senators pointed out that the partnership between FTX and S&C suggested that the latter may have had a hand in the great financial disaster that the collapsed firm’s victim faced. Hence, they bluntly told the court that the legal firm was not qualified to investigate the fraud nor uncover compelling information to help decide the case.
Meanwhile, the American Justice Department recently stated that it had recovered about 55 million shares of the disputed Robinhood shares, which were worth about $20 million, during its investigation on FTX’s former CEO, Bankman-Fried. Currently, the US regulators are eyeing all digital and physical assets that the FTX and its staff previously controlled.