A group of FTX investors have instituted a proposed class action against US law firm Sullivan & Cromwell for their role in the bankrupt crypto exchange’s fraud against its customers. The law firm is known to have worked for the crypto exchange during its rise to prominence, and now the plaintiffs argue that they are also culpable for the company’s wrongdoing.
Details About The Proposed Class Action
According to the court filing, the plaintiffs assert that FTX could not have achieved fraud on such a “tremendous scale” with the help of Sullivan & Cromwell (S & C). They claim that the law firm provided the defunct crypto exchange with “immense resources, connections to regulators, expertise, and assistance,” vital to perpetuating the scheme.
The court document highlighted how S & C formed a close relationship with FTX through the company’s General Counsel, Ryne Miller, who once worked at the law firm. Through him, S & C is said to have “solidified their involvement and interest in FTX’s growth and expansion.” The law firm was also revealed to have provided legal services to FTX’s subsidiaries, including Alameda Research.
Further elaborating on S&C’s deep involvement with the exchange and its sister company, the plaintiffs suggested that there was no way that the law firm wasn’t aware of the fraud and even took steps to aid these companies in their misdealings. Meanwhile, the law firm didn’t stop there; they also sought to benefit from FTX’s collapse.
Sullivan and Cromwell, alongside Miller, were accused of pushing “heavily” for FTX to file for bankruptcy. Miller also apparently ensured that $4 million was wired to the law firm to retain its services for the bankruptcy proceedings. Bitcoinist once reported how the law firm had billed almost $40 million for work done in the crypto exchange’s bankruptcy case.
Criticism Against Proposed Sale Of FTX’s SOL Tokens
FTX creditor Sunil Kavuri recently highlighted the irregularity in the proposed sale of FTX’s discounted SOL tokens to Pantera Capital. Sunil stated that these tokens are meant to be distributed to the exchange’s creditors rather than sold to the crypto-focused asset manager. Pantera will reportedly buy these SOL tokens at a discounted price of $59.95 each.
That doesn’t sit well with Sunil and other creditors, mainly because it was previously revealed, as part of FTX’s repayment plan, that the bankrupt crypto exchange will repay customers based on the crypto prices as of November 2022. These customers argue that the tokens belong to them and it isn’t proper for them to be paid a fraction of it in the dollar equivalent.