A group of four US senators has criticized one of the law firms involved in the bankruptcy case of cryptocurrency exchange FTX for conflicts of interest.
In a letter sent on January 9 to Judge John Dorsey of the US 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 independent examiner of FTX’s activities before its collapse in November. US lawmakers noted that Sullivan & Cromwell, the law firm currently conducting the investigation, had previously provided legal services to FTX and “one of its partners even acted as general counsel to FTX,” marking a conflict of interest amidst of the company’s bankruptcy proceedings.
“The damage that FTX and other mismanaged digital asset companies have caused is considerable, destroying the life savings of tens of thousands of customers in the United States 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 assure customers of FTX – and the general public – that justice is done and to inform Congress about future legislation regarding digital assets.”
The senators added:
“Due to his long legal work for FTX, [Sullivan & Cromwell] may well bear a share of responsibility for the harm caused to the company’s victims. Put bluntly, the firm is simply not in a position to discover the information necessary to ensure confidence in any investigation or conclusions.”
Get this: FTX’s legal advisors *pre-collapse* want to be appointed to oversee investigations INTO the collapse.
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 protection 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.
US authorities have focused on assets previously controlled by FTX and its executives, with the Justice Department announcing on January 9 that it had seized more than 55 million shares Robinhood and more than $20 million as part of the case against Bankman-Fried. Bankman-Fried, BlockFi and FTX creditor Yonathan Ben Shimon had filed lawsuits over the assets.
Cointelegraph reached out to Sullivan & Cromwell but did not hear back at press time.
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