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

By Nicholas Allbright 2 years ago

A previous main law firm for FTX has accused the company’s U.S. basic counsel of channeling business enterprise to Sullivan & Cromwell (S&C), the organization at present serving FTX as personal bankruptcy counsel.

Daniel Friedberg, who was the main regulatory officer of FTX until finally he resigned on Nov. 8, manufactured the allegations as part of a Jan 19. court docket submitting.

In the declaration, Friedberg alleges that FTX US direct counsel Ryne Miller, who is a previous partner at S&C, channeled business towards his former legislation organization across numerous situations. Friedberg mentioned:

“Mr. Miller informed me that it was quite crucial for him individually to channel a large amount of small business to S&C as he wanted to return there as a lover right after his stint at the Debtors.”

Law firm and former chief of the Securities and Exchange Commission Business office of Net Enforcement, John Reed Stark, highlighted the magnitude of the allegation in a Jan. 20 tweet. 

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

Friedberg alleged that soon after Miller’s hiring in early 2020, Miller requested whether or not he could retain the services of his previous regulation business, to which Friedberg replied by declaring it was Miller job “to only employ the very best outside counsel for the occupation.”

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

Friedberg also accused Miller of obtaining earmarked $200 million of LedgerX resources for S&C to spend its lawful charges, expressing: “there was over $200 million hard cash in LedgerX and that he was likely to deliver these cash to S&C, and that personal bankruptcy lawful expenditures had been therefore not a issue.”

Selection incoming

Even though the filing is simply a declaration in assistance of an FTX lenders objection to the retention of FTX attorneys Sullivan & Cromwell LLP, it would make a amount of accusations that ended up earlier undisclosed.

Friedberg apologized for filing his declaration at the past moment, stating that he had no time due to the submitting of the Dietderich Supplemental Declaration. Andrew Dietderich is a spouse at S&C who submitted the declaration in assistance of FTX’s movement to retain S&C as their lead counsel.

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Friedberg finishes his declaration by affirming that he would “testify competently to the details established out in this Declaration” if named upon to testify.

A hearing is scheduled to take place at the individual bankruptcy courtroom on Jan. 20, the place the choose will hear from a variety of functions involved in advance of determining regardless of whether FTX will be capable to retain S&C as its lead counsel. 

Cointelegraph has achieved out to FTX for remark.