FTX Bankruptcy Lawyer Cleared of Conspiracy Charges

An independent inquiry into the law firm Sullivan & Cromwell LLP, which managed the bankruptcy of FTX, concluded that the firm was unaware of the severe financial issues and underlying fraud that contributed to the downfall of the previously successful exchange. Conducted by former U.S. prosecutor Robert Cleary, the investigation revealed that although attorneys at Sullivan & Cromwell did make incorrect statements while representing FTX, they did so without knowing the statements were erroneous.

After the publication of the investigation’s findings, Sullivan & Cromwell responded with a statement expressing their confidence in the work they did before the bankruptcy filing and the initiation of the Chapter 11 cases. They also welcomed the examiner’s conclusions, which dismissed various unfounded allegations against their work for FTX. This public statement was meant to address the concerns that had been raised by FTX creditors and clients seeking justice.

The investigation was initiated following significant suspicion and criticism from FTX creditors and clients who distrusted Sullivan & Cromwell. When the firm was initially selected to oversee the bankruptcy proceedings, there was backlash from these parties, who believed that the firm’s prior work with FTX compromised its ability to handle the case impartially.

FTX officially filed for Chapter 11 Bankruptcy on November 17, 2022, following a series of alarming events that led to its entire collapse. Just a week before this high-profile crash, Binance considered acquiring FTX and entered into a non-binding agreement to purchase the exchange and assume control of its daily operations. The market reacted negatively to this news, causing the value of the FTT token to dive from approximately $22 to $5.50 within a single trading day.

Within 24 hours of this significant drop, Binance withdrew from the tentative deal, citing issues with FTX’s financial health, the mingling of customer funds, and initial investigations by U.S. authorities into the exchange. This withdrawal further accelerated FTX’s downfall and fueled widespread concerns that something was seriously wrong at the company.

In the days following Binance’s retraction, reports surfaced indicating that around $1 billion in customer assets were missing from FTX. This revelation caused even more panic and led to a rush of customers trying to withdraw their funds from the failing platform, exacerbating the situation.

The investigation’s findings were particularly significant because they addressed the widespread criticisms aimed at Sullivan & Cromwell. The firm’s involvement had been controversial from the outset due to its previous association with FTX, and many stakeholders questioned whether the law firm could handle the bankruptcy proceedings without bias.

The results of the independent inquiry provided some clarity on the role of Sullivan & Cromwell in the FTX debacle. While it was determined that the firm was not aware of the fraudulent activities and critical financial issues, the findings also highlighted the complexity and rapidly unfolding nature of the situation that led to FTX’s swift collapse.

7 thoughts on “FTX Bankruptcy Lawyer Cleared of Conspiracy Charges

  1. Glad to see fairness and transparency are upheld. Sullivan & Cromwell can continue their work with confidence.

  2. It’s reassuring to see that the independent inquiry cleared Sullivan & Cromwell of any wrongdoing. Transparency is key!

  3. Nice to hear that Sullivan & Cromwell acted in good faith throughout this ordeal. Their confidence in their work is justified!

  4. The thorough investigation by Robert Cleary is impressive. Sullivan & Cromwell’s clean slate is reassuring for all stakeholders.

  5. The positive outcome of this inquiry is essential for rebuilding trust among FTX stakeholders. Good job, Sullivan & Cromwell!

  6. This is infuriating! So many people lost their money and now were supposed to believe that nobody saw this coming? Give me a break!

  7. Strong work by Sullivan & Cromwell in maintaining their integrity through this challenging situation. The findings support their professionalism.

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