FTX U.S. channeled business to S&C, alleges former Chief Regulatory Officer

• Former FTX legal counsel accused the firm’s U.S. general counsel of channeling business to S&C.
• S&C allegedly served as personal counsel to Sam Bankman-Fried and another key FTX executive.

Former FTX Chief Regulatory Officer Daniel Friedberg has accused the firm’s U.S. general counsel of channeling business to Sullivan & Cromwell (S&C), who were allegedly serving as FTX’s bankruptcy counsel.

FTX CRO alleges issues with S&C

Friedberg, who was the exchange’s chief regulatory officer until his resignation on 8 November 2022, made the allegations in a court filing on 19 January 2023.

The declaration was made after a creditor objected to the exchange’s plan to retain S&C as its lawyers throughout the bankruptcy case.

Friedberg claimed that FTX. U.S. lead counsel Ryne Miller, a former partner at S&C, directed business to his former law firm in several cases. As per the filing, Friedberg reminded Miller that his allegiance was to the debtor, not to the S&C — which he suggested continued to be a problem throughout his stint at the exchange.

The former Chief Regulatory Officer stated:

“Mr. Miller informed me that it was very important for him personally to channel a lot of business to S&C as he wanted to return there as a partner after his stint at the Debtors.”

S&C also served as personal counsel to SBF

Friedberg further alleged that Miller had hired S&C to be the primary counsel for FTX. U.S., FTX Derivatives (formerly LedgerX), and Sam Bankman-Fried’s holding company, Emergent. He also mentioned that S&C had served as personal counsel to Bankman-Fried and another key executive.

While elaborating on SBF’s connection with S&C, Friedberg stated:

“S&C represented all of these groups simultaneously without proper conflict waiver. S&C also represented Sam and Nishad personally. The lawyers in this important bankruptcy proceeding should be independent and not have a history of representing all of the various groups and the principals at one time.”