A group of four United States senators has criticized one of the law firms involved in the bankruptcy case of crypto exchange FTX for conflicts of interest.
In a January 9 letter to Judge John Dorsey of the U.S. Bankruptcy Court for the District of Delaware, Senators John Hickenlooper, Thom Tillis, Elizabeth Warren, and Cynthia Lummis—a bipartisan group—asked the judge to approve a motion to appoint an examiner in the activities of FTX before its collapse in November. US lawmakers said Sullivan & Cromwell, the law firm currently handling the investigation, had previously provided legal services to FTX and that “one of its partners even served as general counsel for FTX,” in what is perceived as a conflict. of interest amid the firm’s bankruptcy proceedings.
“The damage that FTX and other mismanaged digital asset firms have caused is considerable – they have destroyed the life savings of tens of thousands of customers in the US and around the world,” the letter said. “We believe it is critical that a strong, objective, and disinterested examiner be appointed in this case to conduct a thorough investigation of FTX, FTX US, and their related entities in order to discover the facts necessary to secure FTX customers, and to the general public – that justice be done and to inform congressional consideration of future digital asset legislation.”
The senators added:
“Given his longstanding legal work for FTX, (Sullivan & Cromwell) may well have a measure of liability for the harm inflicted on the company’s victims. Put bluntly, the company is simply not in a position to discover the information necessary to ensure confidence in any investigation or findings.”
Get this: FTX legal counsel *before the crash* want to be appointed to oversee investigations INSIDE the crash.
I’m not a legal expert, but that sounds like a conflict of interest. With @SenThomTillis @SenWarren @SenLummishttps://t.co/iz3k9yP1uT
— Senator John Hickenlooper (@SenatorHick) January 10, 2023
FTX Group filed for Chapter 11 bankruptcy on November 11, and former CEO Sam Bankman-Fried was indicted on eight criminal counts in federal court in December. The next public hearing in the FTX bankruptcy case is scheduled for January 11, while the Bankman-Fried trial is expected to begin in October.
Related: Former FTX lead engineer in talks with federal prosecutors in the Bankman-Fried case
US authorities have targeted assets previously controlled by FTX and its executives, with the Justice Department announcing on January 9 that it had seized more than 55 million Robinhood shares and more than $20 million in US currency. as part of the case against Bankman-Fried. Bankman-Fried, BlockFi and FTX creditor Yonathan Ben Shimon had made separate claims to the assets.
Cointelegraph reached out to Sullivan & Cromwell, but did not hear back by press time.
