A group of creditors who were affected by the collapse of FTX, a cryptocurrency exchange, have taken legal action by filing a class action lawsuit against Sullivan and Cromwell (S&C), the law firm overseeing the exchange’s bankruptcy proceedings. The creditors allege that S&C lawyers were involved in fraudulent activities and unlawfully transferred client funds to an Alameda Research subsidiary. They claim that S&C’s involvement with FTX started even before the exchange’s bankruptcy, providing evidence of their communication.
The creditors argue that S&C has failed to act objectively and holds some responsibility for the downfall of the cryptocurrency exchange. Allegedly, S&C served as an external consultant to FTX for more than a year, during which they received over $8 million from the exchange. The lawsuit also highlights that a former employee of S&C, Ryan Miller, joined FTX as legal counsel three years ago and facilitated 20 transactions, including the acquisition of LedgerX.
During the bankruptcy proceedings, Sullivan and Cromwell reportedly received over $180 million. Therefore, the plaintiffs are requesting that the American court returns the funds transferred to the law firm. In previous developments, FTX’s subsidiary Digital Custody, which was purchased for $10 million in 2022, was put up for sale as part of the bankruptcy process.
Henrik Lindqvist is our DeFi and on-chain reporter, splitting his time between Stockholm and London. A former software engineer at Klarna, he switched to journalism in 2021 and has since broken stories on MEV exploits, restaking risks and Layer-2 economics. Henrik writes the BTCNews weekly Layer-2 newsletter and has lectured on blockchain architecture at KTH Royal Institute of Technology.
