A former chief lawyer for FTX has accused the corporate’s U.S. normal counsel of channeling enterprise to Sullivan & Cromwell (S&C), the agency presently serving FTX as chapter counsel.
Daniel Friedberg, who was the chief regulatory officer of FTX till he resigned on Nov. 8, made the allegations as a part of a Jan 19. courtroom submitting.
Within the declaration, Friedberg alleges that FTX US lead counsel Ryne Miller, who’s a former companion at S&C, channeled enterprise in the direction of his former regulation agency throughout quite a few instances. Friedberg said:
“Mr. Miller knowledgeable me that it was crucial for him personally to channel numerous enterprise to S&C as he wished to return there as a companion after his stint on the Debtors.”
Lawyer and former chief of the Securities and Alternate Fee Workplace of Web Enforcement, John Reed Stark, highlighted the magnitude of the allegation in a Jan. 20 tweet.
Tomorrow is a listening to earlier than FTX Chapter Choose John Dorsey re the engagement of Sullivan & Cromwell. If this declaration is true, I can’t think about any circumstance the place the FTX Trustee can be allowed to interact Sullivan & Cromwell for any function.https://t.co/5vPC4pYwhP https://t.co/lxPJ8pAQUq
— John Reed Stark (@JohnReedStark) January 20, 2023
Friedberg claims within the submitting that he reminded Miller that his “allegiance” was to the debtor and to not S&C, however this problem “continued to be an issue all through his work” at FTX.
Friedberg alleged that after Miller’s hiring in early 2020, Miller requested whether or not he may rent his former regulation agency, to which Friedberg replied by saying it was Miller job “to solely rent the most effective outdoors counsel for the job.”
Miller ended up partaking S&C to be major counsel for FTX US, FTX Derivatives (previously LedgerX), and Sam Bankman-Fried’s holding firm Emergent, Friedberg wrote.
Friedberg additionally accused Miller of getting earmarked $200 million of LedgerX funds for S&C to pay its authorized charges, saying: “there was over $200 million money in LedgerX and that he was going to ship these funds to S&C, and that chapter authorized prices have been subsequently not an issue.”
Whereas the submitting is solely a declaration in assist of an FTX collectors objection to the retention of FTX legal professionals Sullivan & Cromwell LLP, it makes numerous accusations that have been beforehand undisclosed.
Effectively, I simply completed studying the Declaration of Daniel Friedberg.
It’s truthful to say that this is likely one of the extra surprising sworn statements I’ve learn in an excellent lengthy whereas.
If half of what Mr. Friedberg says is true, he has simply blown the highest off of this chapter case.
— MetaLawMan (@MetaLawMan) January 19, 2023
Friedberg apologized for submitting his declaration on the final second, saying that he had no time as a result of submitting of the Dietderich Supplemental Declaration. Andrew Dietderich is a companion at S&C who filed the declaration in assist of FTX’s movement to retain S&C as their lead counsel.
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Friedberg finishes his declaration by affirming that he would “testify competently to the details set out on this Declaration” if known as upon to testify.
A listening to is scheduled to happen on the chapter courtroom on Jan. 20, the place the choose will hear from numerous events concerned earlier than deciding whether or not FTX will be capable to retain S&C as its lead counsel.
Cointelegraph has reached out to FTX for remark.