Ex-FTX lawyer asserts US General Counsel directed business to Sullivan & Cromwell, former firm

A former chief regulatory officer of FTX, Daniel Friedberg, has supported a motion to prevent FTX from using Sullivan & Cromwell LLC as its lead bankruptcy counsel.

 

Friedberg, who resigned from his position on November 8th, has accused the company’s US general counsel, Ryne Miller, of directing business towards Sullivan & Cromwell, where Miller was formerly a partner.

 

Friedberg stated in a court filing that Miller had informed him that it was important for him to direct business to the firm as he wanted to return as a partner after his time at FTX.

 

The significance of these allegations has been noted by lawyer and former chief of the SEC Office of Internet Enforcement, John Reed Stark.

 

In his filing, Friedberg claims that he reminded Miller that his loyalty was to the debtor, FTX, and not to Sullivan & Cromwell, suggesting that this was a recurring issue throughout Miller’s tenure at the company.

 

Friedberg alleges that after Miller’s hiring in early 2020, Miller asked if he could hire his former law firm, to which Friedberg replied that it was Miller’s responsibility to hire the best outside counsel for the job.

 

However, Miller ultimately engaged Sullivan & Cromwell as primary counsel for FTX.US, FTX Derivatives (formerly LedgerX), and Emergent, the holding company of Sam Bankman-Fried.

 

Friedberg also accuses Miller of designating $200 million of LedgerX funds to pay for Sullivan & Cromwell’s legal fees, stating that Miller had said that there was over $200 million in cash in LedgerX and that he was going to send those funds to Sullivan & Cromwell, making bankruptcy legal costs not a concern.

 

Decision Arriving

The filing is a declaration in support of an objection by FTX creditors to the retention of FTX’s lawyers, Sullivan & Cromwell LLP, and it makes various accusations that have not been previously disclosed.

 

Friedberg apologized for submitting his declaration at the last moment, citing the filing of the Dietderich Supplemental Declaration by Andrew Dietderich, a partner at S&C, as the reason for the delay.

 

He concludes his declaration by stating that he will be able to competently testify to the facts outlined in the declaration if called upon to do so.

 

A hearing is scheduled to take place at the bankruptcy court on January 20th, where the judge will hear from various parties involved before deciding whether FTX can retain S&C as its lead counsel.

 

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