Sullivan & Cromwell accused of being FTX’s ‘partner in fraud’

Crypto Briefing

A group of FTX creditors, represented by Edwin Garrison, has launched a class-action lawsuit against the prestigious law firm Sullivan & Cromwell (S&C), alleging that the firm knowingly provided services or assistance that directly enabled or facilitated FTX’s fraudulent activities, according to a legal document dated February 16.

“FTX could not have achieved fraud of such tremendous scale alone. S&C’s immense resources, connections to regulators, expertise, and assistance were vital to perpetuating the scheme,” the filing wrote.

The lawsuit accuses S&C of being involved in a civil conspiracy, aiding and abetting fraud and fiduciary breaches, and engaging in a RICO enterprise allegedly operated by FTX and its former CEO, Sam Bankman-Fried (SBF). A RICO enterprise is an organization with a structure and operations designed to achieve illegal goals repeatedly over time.

Specifically, creditors alleged that S&C used its legal expertise, regulatory knowledge, and extensive resources to enable FTX’s deceptive practices. As highlighted in the legal filing, Ryne Miller, a former S&C attorney who became General Counsel for FTX US, was a key figure in forming a close relationship between S&C and FTX, partly due to his regulatory connections.

Miller was said to have leveraged his network to smooth FTX’s path through hurdles like the LedgerX acquisition, reportedly funded with stolen funds.

“Ryne Miller’s connections to regulators were crucial to the pursuit of this deal. With Miller in place, and S&C at the helm, FTX enjoyed a direct throughline to CFTC Commissioner Rostin Behnam, whom Mr. Miller and SBF repeatedly emailed directly, conferenced over Zoom, and met privately over dinners to discuss “a LedgerX matter of considerable urgency,” “a potential stablecoin regulatory framework,” and the CFTC’s “continued engagement” as FTX US proceeded with the LedgerX acquisition,” the filing noted.

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