FTX lawyers have accused Sam Bankman-Fried of attempting to disrupt the cryptocurrency empire’s bankruptcy process with a “Twitter attack”.
In recent weeks, Bankman-Fried has accused in several tweets and blog posts Sullivan & Cromwell, the law firm representing FTX in Chapter 11 proceedings, of putting him under pressure to accelerate corporate bankruptcies, including the US arm of FTX, which the former billionaire’s claims were unacceptable. Valid. The company has denied these allegations.
James Bromley, a partner at Sullivan & Cromwell, said at a court hearing on Friday that the company was “fighting a ghost” in its attempt to address Bankman-Fried’s public criticism of the issue. His or her turn Representing FTX in a bankruptcy case without being able to be questioned in court.
“One of the things that debtors generally encounter in these cases is Twitter assault,” Bromley said.
The comments came at a hearing in which the bankruptcy court considered an application by two FTX clients seeking to block Sullivan’s appointment due to what they alleged was a conflict of interest stemming from the company’s previous work for the cryptocurrency.
The judge eventually dismissed the lawsuit. “There is no evidence of any real conflict here,” said Judge John Dorsey.
The decision clears the way for Sullivan to earn millions of dollars in fees representing FTX while trying to pay off account holders. Dorsey noted that FTX has hired other law firms that can be called upon if a conflict arises.
The hearing, and Bromley’s comments, indicate how a high-profile FTX case and the social media storm around it will complicate efforts to restructure the cryptocurrency exchange and return money owed to millions of creditors.
Former FTX insider Dan Friedberg filed new charges against Sullivan Thursday over alleged conflicts of interest in a court filing at the last minute before the hearing. The judge called the lawsuit riddled with “rumour, speculation and hearsay” and “not something I would like to admit in evidence”.
Earlier this week, Sullivan provided dozens of pages of additional details about the nearly $10 million in legal work she completed for the Bankman-Fried companies before they were placed into bankruptcy protection last year. Two former Sullivan attorneys have also held senior legal positions at FTX.
Bromley said on Friday that the company should have been more forthcoming in revealing the extent of its past ties to the failed cryptocurrency pool. “In retrospect, Your Honor,” he told the court, “we should have gone further in the original declaration.”
It also alleged that Bankman Fried, who has pleaded not guilty to the US fraud charges, and other insiders who “brought the company to its knees” are concerned about information Sullivan provides to prosecutors and regulators.
“They can throw stones at the debtors’ lawyers who provide the information to the prosecutors,” he said.
The US Department of Justice had objected to the company’s initial disclosure of its work for FTX, and pushed for more information. Government attorneys said on Friday they were satisfied with the additional details provided by Sullivan.
Sullivan and Bankman-Fried declined to comment.
Separately, US prosecutors confirmed on Friday that they seized nearly $700 million in cash and stocks from Bankman-Fried, including more than $500 million in stocks in trading platform Robinhood.
The withdrawal, detailed in the court filing, also includes funds held in three accounts on cryptocurrency exchange Binance, the values of which have not been disclosed.
The government revealed that the forfeiture took place over the past few weeks, while Bankman Fried was under house arrest in California after being released on a $250 million bond. He faces eight criminal charges.