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The Lawyers Sam Bankman-Fried Once Trusted Are Drawing Criticism

Just before FTX collapsed in November, one of its outside lawyers at the law firm Sullivan & Cromwell emailed a colleague at another firm, insisting that the cryptocurrency exchange’s finances were stable.

Rumors of FTX’s demise were “silliness,” the lawyer, Andrew Dietderich, wrote. “FTX is rock solid, doesn’t use customer funds or take credit risk at all,” he said.

Four days later, FTX filed for bankruptcy. Mr. Dietderich quickly arranged for Sam Bankman-Fried, the exchange’s founder, to step down so that a new chief executive, John Jay Ray III, a specialist in corporate turnarounds, could lead the company. When Mr. Ray needed lawyers to manage the bankruptcy, a lucrative assignment, he asked a judge to appoint the same ones who had helped get him the job: Sullivan & Cromwell.

Now, with Mr. Bankman-Fried set to go on trial next month on fraud charges stemming from FTX’s failure, Sullivan & Cromwell’s tangled history with the exchange is drawing scrutiny — especially from Mr. Bankman-Fried’s lawyers and family.

For months, Mr. Bankman-Fried has attacked Sullivan & Cromwell in court papers and on social media, arguing that the firm’s lawyers set him up as the fall guy for FTX’s implosion while downplaying their

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September 24, 2023 by ATTORNEY

FTX bankruptcy ‘on track to be very expensive’ as fees top $200mn

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Lawyers, advisers and other professionals working on the FTX bankruptcy have racked up $200mn in fees as they attempt to restructure the “smouldering heap of wreckage” left behind by the cryptocurrency exchange’s collapse in November, an independent auditor found.

In a 47-page filing on Tuesday, a court-appointed fee examiner said she believed the amounts invoiced by hundreds of lawyers from firms including Sullivan & Cromwell and Quinn Emanuel Urquhart & Sullivan, alongside other financial and tax advisers, were not “wholly unreasonable”.

“FTX is hardly the first business organisation felled by a knave,” Katherine Stadler wrote, in an apparent reference to the company’s founder Sam Bankman-Fried, who was charged by federal prosecutors last December over his exchange’s spectacular implosion.

“What makes these cases extraordinary, however, is the largely unregulated financial system in which the debtors (and other similar financial technology companies) operate, combined with their global scope, the complete absence of corporate records, and the non-existence of even the most basic corporate governance,” she added.

Stadler’s report, which focused on the fees requested for the first 90

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June 25, 2023 by ATTORNEY

FTX bankruptcy fees near $20 million for 51 days of work

The FTX logo on a laptop screen.

Andrey Rudakov | Bloomberg via Getty Images

FTX’s top bankruptcy, legal and financial advisors have billed the company more than $19.6 million in fees for work done in 2022, according to Tuesday bankruptcy court filings. More than $10 million of that was for work done in November 2022 as Sam Bankman-Fried’s crypto empire entered bankruptcy protection in Delaware.

The firms will initially only be paid a little over $15.5 million, or 80% of the value of their work, under a court-ordered interim compensation plan.

The law firms that billed FTX are Sullivan & Cromwell, Landis Rath & Cobb, and Quinn Emanuel Urquhart & Sullivan. Professional advisor Alvarez & Marsal and financial advisor AlixPartners also billed the company.

Some of the work the firms billed for involved taking meetings with other companies that also were billing FTX for their time or corresponding with former and current executives, including Caroline Ellison, the former CEO of Bankman-Fried’s hedge fund, Alameda Research.

Landis Rath & Cobb and Sullivan & Cromwell, FTX’s primary legal firms, billed the company a combined $10.7 million for more than 8,400 hours of work. Landis Rath & Cobb billed $1.16 million for work

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February 10, 2023 by ATTORNEY

FTX lawyers to reap millions from the bankruptcy case: Report

According to a new report, the controversial law firm Sullivan & Cromwell is on track to reap a fortune from its work on the FTX cryptocurrency exchange’s bankruptcy case.

Sullivan & Cromwell’s costs in the FTX case are estimated to reach hundreds of millions of dollars before the firm’s bankruptcy investigation is over, Bloomberg Law reported on Jan. 27.

As the FTX trial is scheduled for October 2023, the firm’s lawyers now have about eight months to untangle the complicated FTX case, which will cost a lot of time and money. Sullivan & Cromwell has more than 150 people working on the FTX case, including 30 partners with rates exceeding 2,000 per hour. The report notes that associates are charging up to about $1,500 per hour, citing a court filing.

Source: Bloomberg Law

In a court declaration, Sullivan & Cromwell said that its proposed fees are in accordance with market rates by other leading law firms and actually represent a discount from the rates used in non-bankruptcy matters.

Bankruptcy experts have been facing a high demand as the crypto winter of 2022 generated many bankruptcy filings, including those by major crypto firms like Genesis Global Trading, Celsius Network and

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February 5, 2023 by ATTORNEY

FTX Fights Sullivan & Cromwell Removal Attempt From Bankruptcy

Sullivan & Cromwell’s removal or limitation as bankruptcy counsel for FTX would “severely, if not irreparably” harm customers and creditors, the cryptocurrency exchange’s CEO John Ray told a judge.

An “army” led by the firm’s lawyers have worked under Ray’s supervision around the clock for the past two-plus months, he told Delaware Bankruptcy Court Judge John T. Dorsey in a filing. The work has stopped assets from being depleted and aided federal investigations, he said.

“The advisors are not the villains,” Ray said. “This is not the time to distract and burden the debtors.”

FTX in the Tuesday filings is defending Sullivan & Cromwell’s role as its lead bankruptcy counsel after four US senators questioned the firm’s work for the crypto exchange prior to its implosion. The US Trustee has also raised concerns about whether the firm’s disclosures have been sufficient.

Sullivan & Cromwell has advised FTX since the exchange first initiated Chapter 11 proceedings in November, listing assets and liabilities of at least $10 billion. Dorsey is scheduled to weigh in on FTX’s application to keep the firm as its main bankruptcy counsel in a Friday hearing.

In a court filing on behalf of FTX, the firm said that

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January 20, 2023 by ATTORNEY
September 2023
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