FTX justifies appointment of Sullivan & Cromwell as legal advisor

Cryptocurrency exchange FTX has defended its decision to appoint law firm Sullivan & Cromwell (S&C) as an advisor in response to objections raised about the move.

In a filing on January 17th, FTX stated that S&C’s role at the bankrupt exchange was of “critical importance,” citing how its information sharing with U.S. prosecutors and regulators led to the charge and arrest of Sam Bankman-Fried (SBF) and his accomplices.

The filing also stated that claims that S&C’s previous advisory role with the exchange could lead to a potential conflict of interest were false, as the law firm had performed a conflicts check procedure that showed it was a “disinterested person” in the case.

FTX CEO John Ray III and the Official Committee of Unsecured Creditors also submitted separate filings on January 17th in support of retaining Sullivan & Cromwell.

Ray stated that the S&C team was essential in bringing order to a chaotic situation, adding that he had also employed a new law firm to serve as counsel on matters to which S&C might be conflicted.

Additionally, the unsecured creditors argued that the U.S. Trustee’s objections were based on a misinterpretation of the Bankruptcy Code and that it had no objection to the retention of S&C because the law firm has performed a substantial amount of work and its efforts were integral to the case.

They also argued that failure to retain the firm would not be in the best interests of the derivatives.