Key Takeaways
- FTX creditors accuse Sullivan & Cromwell of profiting from fraud, alleging complicity in the exchange’s downfall.
- The lawsuit questions the law firm’s ability to remain impartial in the bankruptcy case.
- Former FTX employees allege that FTX’s general counsel steered business back to Sullivan & Cromwell.
FTX’s bankruptcy proceedings have entered a new phase, marked by a class-action lawsuit initiated by the exchange’s creditors against Sullivan & Cromwell (S&C), the law firm managing the case.
In a legal document submitted on February 16, the creditors accuse S&C of being complicit in the “FTX Group’s multibillion-dollar scam.” The case alleges that the firm gained financially from FTX’s fraudulent activities.
FTX Bankruptcy Saga Escalates with Class-Action Lawsuit
Sullivan & Cromwell (S&C) was allegedly aware of fraudulent actions and mismanagement of class members’ funds by FTX. Despite this, S&C allegedly saw an opportunity for financial gain from the misconduct of the FTX Group. Therefore, the case says, it implicitly consented to support illegal behavior for its own benefit. The lawsuit demands compensation for various charges, including civil conspiracy, assistance in fraud, and support in breaching fiduciary duties.
The lawsuit said:
“S&C knew of FTX US and FTX Trading Ltd.’s omissions, untruthful and fraudulent conduct, and misappropriation of Class Members’ funds. Despite this knowledge, S&C stood to gain financially from the FTX Group’s misconduct and so agreed, at least impliedly, to assist that unlawful conduct for its own gain.”
Teuta is a seasoned writer and editor with more than 15 years of experience. She has expertise in covering macroeconomics and technology as well as the cryptocurrency and blockchain industries. She has worked for several publications as a journalist and editor, including Forbes, Bloomberg, CoinTelegraph, Coin Rivet, CoinSpeaker, VRWorld and Arcane Bear.
Teuta began her professional career in 2005, working as a lifestyle writer at Cosmopolitan in Croatia. From there, she branched out to several other publications, covering mainly business and the economy. She then turned her attention to the world of cryptocurrency and blockchain, believing that crypto is among the most important inventions in the history of humanity. Her involvement in fintech began in 2014 and she has since lent her expertise in writing, editing and gathering information about the world of crypto, blockchain, NFTs and Web3.
An all-round news hound, mentor, editor, and writer, Teuta enjoys teamwork and good communication. She holds a WSET2 diploma and has a thing for chablis, punkrock music and shoes. She also holds a double MA in Political science and Entrepreneurship.
