Sam Bankman Fried, the US Trustee, and Senators are all concerned about Sullivan and Cromwell’s prior interactions with the cryptocurrency exchange.
Separate filings from FTX CEO John Ray III and the official Committee of unsecured creditors supported the move to retain Sullivan & Cromwell. The U.S. Trustee’s objections, according to FTX’s unsecured creditors, were based on an incorrect interpretation of the Bankruptcy Act.
The decision to retain Sullivan & Cromwell was supported by separate papers from FTX CEO John Ray III and the official Committee of Unsecured Creditors. The complaint expresses fear that the company would trample on future work by an independent examiner and is like those made by a bipartisan group of Unites States Senators and Sam Bankman-Fried, the creator of the cryptocurrency exchange.
Trustee Andrew Vara, a Department of Justice official said, “S&C’s disclosures as filed are wholly insufficient to evaluate whether S&C satisfies the Bankruptcy Code’s conflict-free and disinterestedness standards.” “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 pointed out that FTX’s General Counsel Ryne Miller spent eight years as an employee of S&C, and the law firm might find itself in the “conflicted situation” of looking into both it and its former employee.
“Sam Bankman-Fried (SBF) and his associates were charged and arrested because of the law firm’s information sharing with U.S. prosecutors and regulators, according to FTX, which described the law firm’s involvement in the bankrupt exchange as being of “vital importance.” Sleuths and criminology fans are paying close attention to the case.
The brief states that S&C undertook a conflict check technique that demonstrated it was a “disinterested person” in the matter, refuting concerns that its prior advisory involvement with the exchange could have created a potential conflict of interest.
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