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DOJ Oppose FTX Lawyers, Questions Impartiality Citing Previous Engagement

The US Department of Justice (DOJ) supports Sam Bankman-Fried and Senators to object to FTX’s decision to choose Sullivan and Cromwell (S&C) as their attorney despite their previous engagement with the crypto exchange

DOJ Questions Impartiality of FTX Lawyers

The DOJ filed a motion of objection on January 13, illustrating that engaging the New York-based Sullivan and Cromwell subjected the ongoing bankruptcy proceedings to potential conflicts of interest. 

The allegations mirror the stance adopted by the bipartisan US senators and embattled Sam Bankman-Fried’s submission that such a choice would likely compromise the future engagement of independent examiners.

A DOJ executive Andrew Vara indicated that the firm’s disclosures should be considered deficient in constituting the basis of ascertaining the satisfaction of the bankruptcy code. In addition, Vara revealed that the details disclosed by the FTX’s attorney could not qualify or dismiss the existence of conflict and disinterestedness standards. The DOJ official emphasized the proof of incomplete disclosure is adequate to reject the application.

FTX Lawyer Vulnerable to Conflict of Interest

Vara emphasized that any investigation S&C can only duplicate past findings. He decried the wasteful nature that would unfold if the bankruptcy court approved the FTX motion to engage its previous examiner, now tasked with the comprehensive investigative mandate.

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The dispute arises from the revelation that Ryne Miller earlier was a general counsel for eight years in the law firm and also worked at FTX. In support, Vara confessed that the law firm could be vulnerable to conflicting interests, particularly when probing itself and its previous staffer.

John Ray presented the choice of the law firm as satisfying the debtors’ interests alongside their stakeholders. Besides, in his capacity as the embattled firm’s chief executive since his appointment on November 11, Ray portrayed that S&C is a leading law firm globally in various practice areas, as stated in his December 21 update. 

In a recent post capturing Sam Bankman-Fried’s views on January 12, S&C relations with the embattled firm were strictly transactional. He accused the law firm’s staff of pressuring him to seek bankruptcy protection. 

As such, Sam objected to the firm’s independence in support of concerns disclosed in the senators’ letter dated January 10.

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However, Judge John Dorsey ruled on January 11 that dragging the appointment of the independent examiner was inappropriate. 

Editorial credit: Sergei Elagin / Shutterstock.com 


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Stephen Causby

Stephen Causby is an experienced crypto journalist who writes for Tokenhell. He is passionate for coverage in crypto news, blockchain, DeFi, and NFT.

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