Sullivan & Cromwell allegedly used its authority to help FTX executives seriously defraud FTX’s former customers.
Sullivan & Cromwell (S&C) is FTX’s principal advisory firm. Before the bankruptcy of FTX exchange, this company helped the FTX team deal with the legal challenges and also after the bankruptcy of FTX, this law firm played a crucial role in the bankruptcy case.
On February 16, 2024, the FTX’s creditors filed a lawsuit against the S&C company for its involvement in the FTX’s billion-dollar fraud scheme.
According to the filing, this law firm served as a consultant to FTX executives on major financial transactions and internal communications.
FTX’s 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 in the 16 months before FTX’s bankruptcy, but more than $180 million afterward collected, which amounts to 10% of the total turnover. for 2022.
Now this lawsuit is going to be a very big problem for the future of this law firm, at least because of its involvement in the Crypto sector.
Recently, few media reports claimed that S&C is looking to take on the role of independent regulator for Binance Holdings Ltd, a US subsidiary of top crypto exchange Binance, which is currently in legal conflict with the SEC while it settles matters with the other US government agencies.
Now there are high chances that S&C will fail to get official permission to monitor the crypto exchange BinanceUS.
On February 18, 2024, Bloomberg media also analyzed a lawsuit accusing FTX of creating billions of dollars worth 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 often used to transfer funds to Deltec Bank to create billions of dollars of USDT, which was unethical.
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