FTX creditors have filed a class action lawsuit against the company's legal advisors.
The creditors allege that the law firm of Sullivan and Cromwell was involved in the commission of fraudulent acts by #FTX. The lawsuit details the illegal actions in which the law firm was involved.
In the ever-evolving saga of FTX, each week brings interesting developments, from new cases to strategic developments, and this week is no different.
While the news that FTX has abandoned its rehabilitation plan is still fresh, the bankruptcy case took an unexpected turn when the exchange's creditors filed a class action lawsuit against its legal advisors, Sullivan and Cromwell (SandC).
In a statement filed with the court on Feb. 16, FTX creditors allege that Sullivan and Cromwell, the primary legal advisor overseeing the bankruptcy case, was "actively" involved in FTX Group's "multi-billion dollar fraud" and that the firm profited significantly from the exchange's machinations.
In their lawsuit, the creditors paint a detailed picture of collusion and oversight, alleging that SandC ignored legal and ethical standards and committed fraud that led to the FTX fiasco.
The lawsuit points to illegal conduct, including significant financial transactions and internal communications, indicating the involvement of SandC, which had a close consulting relationship with FTX management.
FTX's lawsuit is against Sullivan and Cromwell
The creditors also argue that the relationship between SandC and FTX was not merely superficial, citing the law firm's receipt of $8.5 million in fees 16 months before FTX filed for bankruptcy. According to the filing, SandC received more than $180 million during the bankruptcy watch period for FTX, which represents 10% of its total revenue in 2022.
Daniel Friedberg, FTX's former general counsel, said in a separate court document that "Mr.
In January 2023, a bipartisan group of U. S.
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