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On Friday, chapter choose John Dorsey accepted 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’ common 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 accepted Sullivan & Cromwell (S&C) to symbolize the debtors as authorized counsel, James “Metalawman” Murphy revealed a Twitter thread explaining that it was odd that S&C would possible be chosen for FTX illustration. “There’s one thing off with the FTX chapter,” Murphy insisted in his submit. Murphy, an lawyer who makes a speciality of 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 superb job aggressively pursuing recoveries for the good thing about Enron’s collectors. Nonetheless, Murphy mentioned that Ray is performing very in a different way from the hard-bargaining CEO he was often 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 prompt for a second that one in every of Enron’s major exterior regulation corporations 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 towards Enron’s exterior regulation corporations.” The lawyer continued:
Vinson & Elkins paid $30 million to settle and Andrews Kurth paid $18.5 million. Based on an unbiased report, these corporations failed to answer purple flags suggesting potential misconduct.
Murphy additionally opined that the last word irony of this case is that the large charges shall be paid by the victims of the FTX fraud — the purchasers. “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 evaluation. Within the submitting, the previous FTX US compliance officer mentioned that Ryne Miller, FTX US’ common counsel, was as soon as employed by S&C.
“Mr. Miller knowledgeable me that it is vitally necessary for him personally to channel numerous 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 court docket members that “there’s no proof of precise battle right here,” including that it was “rumour, innuendo, hypothesis, rumors, and positively not one thing I’d permit to be launched into proof.”
After S&C was appointed as debtors’ counsel, James “Metalawman” Murphy added his two cents concerning the determination. “As anticipated, the choose approves Sullivan & Cromwell as debtors’ counsel. Choose says, on the document 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 almost $700 million in belongings from the disgraced FTX co-founder Bankman-Fried.
What do you concentrate on 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 under.
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