FTX law firm Sullivan & Cromwell has countered the allegations by certain investors of the embattled crypto exchange who accuse the law firm of complicity in a billion-dollar fraud. The law firm has labeled these accusations as “dubious.” At the heart of this legal battle is a federal lawsuit lodged by the FTX investors against the firm, a claim Sullivan Cromwell has dismissed as “innuendo masquerading as facts”. This was asserted by Sullivan Cromwell in a court filing that was made available on Monday.
According to the law firm, defrauded FTX customers are guaranteed full reimbursement of their losses from the failed crypto exchange through the bankruptcy proceedings. The law firm stated, “Plaintiffs in this action, a handful of alleged FTX customers, purport to bring claims against Sullivan & Cromwell to recover the same damages for which they are already being compensated through the bankruptcy process.”
Sullivan & Cromwell had provided legal services for FTX for a span of 16 months leading up to its crash in November 2022. Sam Bankman-Fried, the former lead of the exchange, was sentenced to 25 years in prison in March for defrauding customers of billions.
A collection of investors, represented by The Moskowitz Law Firm, sued Sullivan & Cromwell in February, alleging their complicity in fraudulent activities at the exchange. Sullivan & Cromwell is presently undergoing a court-ordered review to check for any conflicts of interest that should have been dealt with as it steers FTX through bankruptcy proceedings.
On May 8, the exchange announced that it has accumulated billions more than it requires to cover what customers lost. This positions creditors to receive full recoveries based on the price of their cryptocurrency assets at the time of the bankruptcy, in addition to interest.
Meanwhile, The case Re: FTX Cryptocurrency Exchange Collapse Litigation is still ongoing at the U.S. District Court for the Southern District of Florida.