After receiving offers from many law firms, the nine-member committee representing the unsecured creditors of cryptocurrency exchange FTX has chosen legal counsel, the Wall Street Journal reported Dec. 21.
The international law firm Paul Hastings LLP was hired to look after the interests of unsecured creditors in the bankruptcy case, including millions of FTX clients. According to WSJ sources, a process to select a financial adviser is also underway.
FTX’s creditors’ committee was appointed on December 16 by the US Department of Justice. Its members include companies in the cryptocurrency industry such as Pulsar Global, Coincident Capital International and Wintermute Asia.
FTX will be responsible for payment of legal fees related to bankruptcy proceedings affecting clients.
Paul Hastings was founded in 1951 in the United States and has offices in Asia, Europe and Latin America, with more than 450 corporate lawyers, according to its website.
FTX’s new leadership is expected to appear in court in January, notes WSJ. Some of its business units are already up for sale, such as Embed Financial Technologies, LedgerX, FTX Japan, and FTX Europe.
Ordinary clients turned to the law firm the same day that FTX co-founder Gary Wang and former Alameda Research CEO Caroline Ellison pleaded guilty to federal fraud charges. In addition, the US Securities and Exchange Commission (SEC) indicted Ellison and Wang for their involvement in a “multi-year scheme to defraud investors in FTX shares.” The SEC is also investigating other violations of securities law and other individuals and entities involved in the misconduct.
The platform’s former CEO, Sam Bankman-Fried, was also in Federal Bureau of Investigation (FBI) custody in a quick turn of events following the collapse of FTX nearly 40 days ago. As we already told you, Bankman-Fried has obtained bail for USD 250 million.
Bankman-Fried is charged with wire fraud, conspiracy to commit money laundering, conspiracy to commit wire fraud, commodity and securities fraud, and campaign finance violations. If he is found guilty on all counts, he could face up to 115 years in prison.
For allegedly violating commodity laws and defrauding investors, the FTX founder faces additional charges from the Commodity Futures Trading Commission and the Securities and Exchange Commission.
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