FTX CEO fights to keep lawyers as calls for removal intensify
The CEO of crypto exchange FTX has rejected calls for its law firm Sullivan & Cromwell to be replaced as lead counsel in its bankruptcy case.
John J. Ray III, who was appointed as the new FTX CEO on Nov. 11, filed a court motion on Jan. 17, arguing that Sullivan & Cromwell has been integral in taking control over the “dumpster fire” that was handed to him.
Ray suggested that retaining their services is in the best interest of FTX creditors, arguing:
The U.S. Trustee, Andrew R. Vara, had filed an objection to the retention of the law firm on Jan. 14, citing two separate issues.
He claimed that Sullivan & Cromwell had failed to sufficiently disclose its connections and prior work for FTX. He also pointed out that based on publicly-available knowledge, a former partner of the law firm became a counsel to FTX 14 months prior to the bankruptcy filing.
Meanwhile, lawyer James A. Murphy, who goes by the Twitter handle MetaLawMan, suggested on Jan. 14 that the prior work it had done for FTX was not the law firm's only conflict of interest in the case.
At the same time that Sullivan & Cromwell lawyers have had unrestricted access to all internal data about the value of FTX's assets and liabilities...Apollo Global has (reportedly) been quietly offering to buy up creditor claims from FTX customers for pennies on the dollar.
He claimed that private equity firm Apollo Global has been buying up creditor claims from FTX customers for a fraction of their worth. Murphy notes that Apollo’s Chairman of the Board, Jay Clayton, is also employed by Sullivan & Cromwell, which has access to sensitive financial information.
The U.S. Trustee also believed that the current application to retain Sullivan & Cromwell was flawed, as they would “usurp” an
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