The US Department of Justice has opposed FTX hiring Sullivan & Cromwell, the law firm currently tasked with investigating the exchange, citing a potential conflict of interest.
recently legal filingThe US trustee said it is objecting to FTX’s decision for two “broad” reasons. The DOJ said, in the first place, the law firm’s disclosures “are not sufficient to evaluate whether S&C meets the Bankruptcy Code’s anti-conflict and disinterestedness standards”.
In addition, there may be a conflict of interest considering that FTX US General Counsel Raine Miller previously worked at the S&C for eight years. The DOJ said the investigation would place the law firm “in the conflicting position of investigating itself and its former partner.”
“Second, the scope of S&C’s retention cannot be permitted as proposed,” the complaint said, detailing the bankruptcy rules “specifically prohibit debtors from conducting their own investigation.” The DOJ asked the court to deny S&C’s application.
The DOJ’s complaint comes days after a bipartisan group of four United States senators, including John Hickenlooper, Thom Tillis, Elizabeth Warren and Cynthia Lummis, attacked the S&C for nearly identical reasons.
four senators wrote A letter to Judge John Dorsey of the US Bankruptcy Court for the District of Delaware, dated January 9, asked him to approve a proposal to appoint an independent examiner into FTX’s activities prior to its collapse in November. they wrote:
“We believe it is important that a robust, objective and disinterested investigator be appointed to conduct an investigative investigation of FTX, FTX US and its related entities in order to assure FTX’s clients – and the wider public, that – That justice be served and Congress be informed for consideration of future digital asset legislation.
FTX and its group of crypto companies filed for Chapter 11 bankruptcy In early November. Sam Bankman-Fried, disgraced founder of FTX, was arrested later after criminal charges were formally filed against him by US prosecutors in the Bahamas. He was eventually extradited to the US where he was later released from prison. posting a $250m bond in a New York court.
The Southern District of New York indicted SBF on eight criminal charges, including wire fraud and conspiracy to embezzle customer funds. Separately, the SEC has accused SBF of “scheming to defraud equity investors in FTX”.
As per the latest update, FTX has managed to Recovered over $5 billion In cash and liquid assets that can be used to repay creditors. However, it is still “unclear” how large the settlement fund will be for FTX creditors, an FTX advisor has said.
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