FTX Examiner Requests Investigation into Sullivan & Cromwell’s Connections with SBF
Julia Smith
Updated: June 12, 2024 16:46 EDT
Robert Cleary, the appointed independent examiner overseeing investigations related to FTX’s bankruptcy estate, has filed a motion to delve deeper into Sullivan & Cromwell’s (S&C) relationship with Sam Bankman-Fried (SBF) and to address discrepancies in the balance sheet of FTX.US.
Sullivan & Cromwell’s handling of the bankruptcy estate has been under scrutiny due to their involvement in various transactions with the failed crypto exchange before its collapse.
Cleary aims to explore whether Sullivan & Cromwell were aware of any misconduct at the exchange, including allegations that the firm’s attorneys advised Bankman-Fried on purchasing over 55 million Robinhood shares, and the extent of their involvement.
The motion states, “Investigation into this transaction would be crucial in determining if there was a conflict of interest that should have been disclosed when S&C’s retention application was reviewed by the Court.”
Furthermore, Cleary’s probe seeks to uncover whether Sullivan & Cromwell had knowledge of FTX’s significant crypto fraud scheme and any advice or information they provided regarding it.
Moreover, the filing includes a request to investigate the “holes” in FTX’s balance sheet and how they can be rectified, if possible. This investigation may reveal further misconduct or misuse of customer assets at FTX.US.
This latest development is part of the ongoing legal saga surrounding Sullivan and Cromwell’s ties to Sam Bankman-Fried and potential conflicts of interest. Critics argue that the law firm, known for charging high fees, played a role in advising SBF and managing its bankruptcy proceedings, potentially influencing both sides of the crypto fraud scheme.
If approved, Cleary’s investigation is expected to last around 10 weeks and cost approximately $3 million. Bankman-Fried is currently serving a 25-year sentence for orchestrating the global digital asset scheme, while Wang’s sentencing is anticipated later this year.