Judge In FTX Bankruptcy Case Nixes Plea To Remove NY Lawyers

One of America’s elite white-collar law firms has emerged as a contentious figure in the complex FTX saga, Allison Morrow reported for CNN Business.

Photo Insert: Robert Giuffra and Scott Miller, co-chairs of Sullivan & Cromwell

A judge ruled that the bankrupt crypto platform could retain Sullivan & Cromwell as legal counsel, overruling objections from FTX customers who accused the firm of conflicts of interest.

Delaware bankruptcy Judge John Dorsey dismissed an emergency motion to delay proceedings, saying on Thursday there is “no evidence of any actual conflict here.”

The lawyers for two FTX customers had filed the motion, alleging Sullivan & Cromwell hadn’t been transparent in its disclosures about money it had earned from the now-bankrupt platform.

Then FTX’s former top lawyer supported the motion in a court filing, which included additional allegations that one of his former colleagues improperly funneled FTX business to Sullivan & Cromwell.

But Dorsey ruled that “a potential conflict is not per se disqualifying.” In fact, Dorsey said, in any large bankruptcy case “it would be almost impossible” for the debtors’ counsel to have no overlapping business.

The presence of lawyers from other firms ameliorates any potential conflict on Sullivan & Cromwell’s part as those lawyers can step in if needed, he said. Sullivan & Cromwell did disclose last month that prior to FTX’s collapse, it had earned about $8.5 million from the crypto company for legal work since 2021.

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