FTX creditors file a lawsuit against the lawyers overseeing the bankruptcy of the exchange

  • Sullivan and Cromwell, a law firm, is facing a class action lawsuit filed by FTX clients.
  • The lawsuit alleges that the firm was involved in fraudulent activities conducted by FTX.
  • The claim seeks the amount of payment that Sullivan and Cromwell received from FTX for its services.

Customers of the failed cryptocurrency exchange FTX have filed a class-action lawsuit against law firm Sullivan and Cromwell (S&C), who is overseeing the bankruptcy proceedings of the company.

The clients believe that the lawyers at Sullivan and Cromwell were involved in fraudulent schemes conducted by FTX. Their argument is based on the firm’s close connection with the exchange, which pre-dates its bankruptcy. They argue that the firm’s involvement compromises their impartiality and holds them partially responsible for the collapse of FTX.

The class action lawsuit states that Sullivan and Cromwell acted as FTX’s outside counsel for a period of 16 months, during which they received a payment of $8.5 million from the exchange. Additionally, a former employee of Sullivan and Cromwell, Ryan Miller, joined FTX as General Counsel in 2021. The plaintiffs claim that Miller was involved in 20 transactions carried out by the exchange, including the acquisition of assets from Voyager Digital and LedgerX.

According to the lawsuit, Miller was aware that FTX client funds were being transferred to Alameda Research accounts and allegedly shared this information with representatives of Sullivan and Cromwell.

Court documents reveal that Sullivan and Cromwell received over $180 million while overseeing FTX’s bankruptcy proceedings. The plaintiffs are seeking the return of the funds transferred to the firm during these processes.

It is worth mentioning that the US Department of Justice has recently brought charges against individuals involved in the FTX hack, amounting to over $400 million.