On Friday, chapter choose John Dorsey accredited the regulation agency Sullivan & Cromwell (S&C) to be appointed because the debtors’ counsel for FTX, regardless of an objection from Daniel Friedberg, a former FTX US compliance officer. Throughout a Zoom presentation, Friedberg claimed there was a battle of curiosity between former and present FTX executives and FTX US’ normal counsel, as Ryne Miller as soon as labored for S&C. Choose Dorsey, nevertheless, was not swayed by Friedberg’s 17-page objection and appointed S&C, stating that “there’s no proof of precise battle right here.”
FTX Chapter Raises Questions of Battle of Curiosity and Odd Selections
The day earlier than chapter choose John Dorsey accredited Sullivan & Cromwell (S&C) to signify the debtors as authorized counsel, James “Metalawman” Murphy revealed a Twitter thread explaining that it was odd that S&C would seemingly be chosen for FTX illustration. “There’s one thing off with the FTX chapter,” Murphy insisted in his put up. Murphy, an lawyer who focuses on metaverse, Web3, and digital asset topics, questioned the involvement of John J. Ray III, the brand new FTX CEO and chief restructuring officer, within the course of.
The lawyer Murphy factors out that when Ray labored with Enron because the chief restructuring officer, Ray did a wonderful job aggressively pursuing recoveries for the good thing about Enron’s collectors. Nevertheless, Murphy mentioned that Ray is performing very otherwise from the hard-bargaining CEO he was generally known as at Enron and questioned this alteration in perspective. For instance, the metaverse lawyer detailed that when he was restructuring Enron, Ray by no means recommended for a second that certainly one of Enron’s major outdoors regulation companies ought to function debtor’s counsel.
“Inexplicably, Mr. Ray now helps S&C’s transfer to function debtors’ counsel,” Murphy famous. The lawyer additional mentioned that that is regardless of S&C dealing with “20 engagements for FTX in simply 16 months,” being “paid $8.5 million in charges,” and “representing key figures [Sam Bankman-Fried] and [Nishad Singh] personally.” Murphy remarked that at Enron, Ray “aggressively pursued claims in opposition to Enron’s outdoors regulation companies.” The lawyer continued:
Vinson & Elkins paid $30 million to settle and Andrews Kurth paid $18.5 million. In keeping with an impartial report, these companies failed to reply to pink flags suggesting potential misconduct.
Murphy additionally opined that the last word irony of this example is that the big charges shall be paid by the victims of the FTX fraud — the shoppers. “My prediction: The unified entrance of Mr. Ray, the Official Collectors Committee, and S&C will prevail, and the choose will appoint Sullivan & Cromwell debtors’ counsel … This isn’t regular,” Murphy concluded. In the course of the listening to the subsequent day, Daniel Friedberg, a former FTX US compliance officer, objected to S&C being appointed and submitted a 17-page objection for the chapter choose to evaluate. Within the submitting, the previous FTX US compliance officer mentioned that Ryne Miller, FTX US’ normal counsel, was as soon as employed by S&C.
“Mr. Miller knowledgeable me that it is rather essential for him personally to channel a variety of enterprise to S&C as he needed to return there as a accomplice after his stint with the debtors,” Friedberg’s criticism particulars. Regardless of the objection, Chapter Choose Dorsey informed courtroom individuals that “there’s no proof of precise battle right here,” including that it was “rumour, innuendo, hypothesis, rumors, and definitely not one thing I might permit to be launched into proof.”
After S&C was appointed as debtors’ counsel, James “Metalawman” Murphy added his two cents in regards to the determination. “As anticipated, the choose approves Sullivan & Cromwell as debtors’ counsel. Choose says, on the report earlier than him, he has no concern about S&C conflicts of curiosity,” Murphy wrote. “Any suspense about this determination was eradicated when the U.S. Trustee switched place to favor S&C’s appointment.” The identical day, U.S. federal prosecutors seized practically $700 million in property from the disgraced FTX co-founder Bankman-Fried.
What do you consider the appointment of Sullivan & Cromwell as debtors’ counsel for FTX and the allegations of battle of curiosity raised by former FTX US compliance officer Daniel Friedberg and James “Metalawman” Murphy? Share your ideas within the feedback beneath.
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