June 5, 2024
FTX Bankruptcy Lawyer Cleared of Conspiracy
Latest Cryptocurrency News

FTX Bankruptcy Lawyer Cleared of Conspiracy

An independent investigation into Sullivan & Cromwell LLP, the law firm overseeing the FTX bankruptcy, found no evidence of awareness regarding the dire financial conditions and fraud leading to the exchange’s collapse. Former US prosecutor Robert Cleary conducted the probe, highlighting that while attorneys at Sullivan & Cromwell made false statements during FTX representation, they did so unknowingly.

Following the public release of the investigation’s findings, Sullivan & Cromwell issued the following statement:

“Sullivan & Cromwell remains confident in our pre-petition work for FTX and the commencement of the Chapter 11 cases, and we welcome the examiner’s findings to date rejecting various baseless allegations about our work for FTX.”

Reaction and Response to Investigation Findings

Following the investigation’s public disclosure, Sullivan & Cromwell issued a statement. Initially chosen to manage FTX bankruptcy proceedings, the law firm faced criticism from FTX creditors and clients, who suspected foul play. Concerns arose due to the law firm’s pre-bankruptcy collaboration with FTX, which some believed compromised its integrity.

On November 17, 2022, FTX filed for Chapter 11 Bankruptcy following troubling developments, including a failed acquisition attempt by Binance. The market responded negatively to news of the potential acquisition, leading to a significant drop in the value of the FTX Token (FTT) from $22 to $5.50 in a single trading day.

Chain of Events Leading to FTX’s Collapse

Binance’s withdrawal from the acquisition deal intensified concerns about FTX’s financial position and the mingling of customer funds. This contributed to FTX bankruptcy, with subsequent reports indicating approximately $1 billion in missing customer assets. Media reports further exacerbated the situation, prompting customers to withdraw funds hastily from the crumbling platform.

Despite the investigation’s exoneration of Sullivan & Cromwell, questions persist about FTX’s downfall and the circumstances surrounding it. The investigation sheds light on the complexities and challenges faced by legal entities involved in high-stakes financial matters. As the aftermath of FTX’s collapse continues to unfold, stakeholders in the cryptocurrency and legal sectors remain vigilant for lessons learned and potential reforms to prevent similar occurrences in the future.

Image by jcomp on Freepik

Disclosure Statement: Miami Crypto does not take any external funding, or support to bring crypto news to the readers. We do not have any conflicts of interest while writing news stories on Miami Crypto.

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