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Class Action Lawsuit Against Sullivan and Cromwell Involving FTX
A class action lawsuit has been filed on February 16 in Miami, alleging law firm Sullivan and Cromwell’s involvement in an $8 billion fraud related to FTX. The lawsuit accuses the firm of aiding and abetting in the crypto scheme and demands a jury trial on five separate counts.
Details of the Lawsuit
The extensive filing claims that Sullivan and Cromwell went beyond the scope of their services as a law firm and were instrumental in furthering FTX’s misconduct through creative but misleading strategies. The investors, represented by the Moskowitz Law Firm, also highlight the involvement of fellow law firm Fenwick and West in the scam.
The lawsuit further alleges that while customers of FTX suffered substantial losses, Sullivan and Cromwell profited from the fraud, billing an estimated $8.5 billion in fees as the primary legal counsel for the doomed crypto exchange for 16 months prior to its collapse.
FTX Founder’s Legal Troubles
FTX founder Sam Bankman-Fried was found guilty on seven fraud charges in November 2023, following a trial where former Alameda Research and FTX executives testified against him. The lawsuit emphasizes the lack of oversight, internal controls, and checks on exercising powers within FTX.
Recovery and Bankruptcy Proceedings
The lawsuit paints a grim picture of the situation, stating that the FTX Group’s bankruptcy proceeding is likely to continue for years, with no guarantee of full recovery for the victims. It also questions the promise of full repayment made by Sullivan and Cromwell’s attorney to the crypto exchange’s debtors.
Bankman-Fried’s Conflict with Sullivan and Cromwell
Reports suggest that Sullivan and Cromwell’s lawyers were behind the removal of FTX founder Sam Bankman-Fried. With his sentencing scheduled for March 28, 224, the bankruptcy process of FTX is currently under the oversight of an attorney known for his work in recovering assets from troubled companies.
Ian is a cryptocurrency enthusiast blending humor with professionalism. With an engineering background and a storyteller's heart, he simplifies the blockchain world with sharp analysis and a touch of wit. At Cryptowire, he brings his unique perspective to make digital financial innovation accessible to all.
