February 25, 2024

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Former FTX chief lawyer claims US legal counsel channeled business to S&C

Former FTX chief lawyer claims US legal counsel channeled business to S&C

A former chief lawyer for FTX has accused the company’s U.S. general counsel of channeling business enterprise to Sullivan & Cromwell (S&C), the organization at this time serving FTX as bankruptcy counsel.

Daniel Friedberg, who was the main regulatory officer of FTX until he resigned on Nov. 8, produced the allegations as aspect of a Jan 19. courtroom submitting.

In the declaration, Friedberg alleges that FTX US lead counsel Ryne Miller, who is a former companion at S&C, channeled small business in direction of his former law company throughout numerous situations. Friedberg said:

“Mr. Miller educated me that it was incredibly important for him personally to channel a good deal of company to S&C as he wished to return there as a lover following his stint at the Debtors.”

Attorney and former chief of the Securities and Exchange Fee Office of Net Enforcement, John Reed Stark, highlighted the magnitude of the allegation in a Jan. 20 tweet. 

Friedberg claims in the filing that he reminded Miller that his “allegiance” was to the debtor and not to S&C, but this issue “continued to be a difficulty during his work” at FTX.

Friedberg alleged that after Miller’s using the services of in early 2020, Miller requested no matter if he could retain the services of his former regulation organization, to which Friedberg replied by saying it was Miller job “to only employ the ideal exterior counsel for the task.”

Miller finished up partaking S&C to be primary counsel for FTX US, FTX Derivatives (formerly LedgerX), and Sam Bankman-Fried’s keeping business Emergent, Friedberg wrote.

Friedberg also accused Miller of getting earmarked $200 million of LedgerX money for S&C to pay back its lawful fees, stating: “there was over $200 million dollars in LedgerX and that he was going to deliver these money to S&C, and that personal bankruptcy legal expenses had been for that reason not a trouble.”

Choice incoming

Whilst the submitting is simply just a declaration in assistance of an FTX lenders objection to the retention of FTX lawyers Sullivan & Cromwell LLP, it would make a amount of accusations that have been beforehand undisclosed.

Friedberg apologized for filing his declaration at the final second, declaring that he had no time thanks to the submitting of the Dietderich Supplemental Declaration. Andrew Dietderich is a lover at S&C who filed the declaration in assistance of FTX’s movement to keep S&C as their lead counsel.

Related: FTX CEO says he is exploring rebooting the trade: Report

Friedberg finishes his declaration by affirming that he would “testify competently to the info established out in this Declaration” if referred to as on to testify.

A hearing is scheduled to occur at the individual bankruptcy courtroom on Jan. 20, where by the judge will hear from numerous parties associated right before deciding irrespective of whether FTX will be in a position to keep S&C as its guide counsel. 

Cointelegraph has achieved out to FTX for comment.