A group of FTX creditors, represented by Edwin Garrison, has initiated a class-action lawsuit against the prestigious law firm Sullivan & Cromwell (S&C), alleging that the firm knowingly aided and facilitated FTX’s fraudulent activities. The lawsuit accuses S&C of involvement in a civil conspiracy, aiding and abetting fraud and fiduciary breaches, and participating in a RICO enterprise allegedly operated by FTX and its former CEO, Sam Bankman-Fried (SBF). Creditors assert that S&C’s legal expertise, regulatory knowledge, and resources were instrumental in enabling FTX’s deceptive practices, particularly through the actions of Ryne Miller, a former S&C attorney who later became General Counsel for FTX US. The creditors claim that S&C was aware of FTX’s misused funds and regulatory issues but continued to provide services, profiting from its pre-bankruptcy work for FTX. The lawsuit highlights S&C’s role in FTX’s operations, including ’round-trip’ transactions and the Robinhood purchase via Emergent, which allegedly diverted customer funds illegally. Creditors argue that S&C neglected its due diligence responsibilities and benefited from FTX’s fraudulent activities, positioning itself to earn significantly from the bankruptcy proceedings that ensued.
The allegations leveled against S&C suggest a deep entanglement in FTX’s operations and regulatory matters, raising questions about the firm’s ethical and legal responsibilities. If proven true, S&C’s involvement in facilitating FTX’s fraudulent activities could have far-reaching implications not only for the firm but also for the broader legal industry, underscoring the importance of transparency, diligence, and ethical conduct in legal representation. The outcome of this lawsuit will be closely watched by stakeholders in the cryptocurrency and legal sectors, as it could set precedents for future cases involving similar allegations of complicity and misconduct.
