FTX investors drop lawsuit against law firm Sullivan & Cromwell
By David Thomas
Oct 9 (Reuters) -A group of FTX investors told a Miami federal court Wednesday that they are voluntarily dismissing their proposed class action against prominent U.S. law firm Sullivan & Cromwell.
The investors had accused Sullivan & Cromwell of participating in the defunct cryptocurrency exchange's multibillion-dollar fraud and then enriching itself as FTX's lead bankruptcy counsel. The firm had represented FTX on about 20 matters before it collapsed.
But lead plaintiffs' counsel Adam Moskowitz told Reuters on Wednesday that there was "no claim at this stage" against the New York-founded law firm.
Moskowitz cited the work done by FTX bankruptcy examiner Robert Cleary of Patterson Belknap Webb & Tyler, who found in reports issued in May and September that Sullivan & Cromwell was not complicit in the fraud that caused the crypto company's collapse and had not ignored red flags during its representation of former FTX CEO and founder Sam Bankman-Fried.
"Bob Cleary's second report gave us enough evidence that there was no claim there," Moskowitz said.
A Sullivan & Cromwell spokesperson said in a statement that the firm is "pleased that the plaintiffs have withdrawn their meritless claims unconditionally, and our focus remains on returning billions of dollars in recovered assets to FTX’s creditors."
The lawsuit alleged Sullivan & Cromwell had unique insight into the exchange's "convoluted organizational structure, abject lack of internal controls, and dubious business practices." It also accused the firm's lawyers of being "eager to craft not only creative, but misleading strategies that furthered FTX’s misconduct."
Sullivan & Cromwell countered in a May filing that the allegations had "numerous legal defects" and relied on "threadbare allegations, unwarranted assumptions, and legal conclusions that the court need not accept as true even at the pleading stage."
FTX filed for bankruptcy in November 2022 in the wake of claims that the company misused and lost billions of dollars worth of customers' crypto deposits. Bankman-Fried was found guilty a year later of charges that he defrauded FTX customers by using their funds to prop up his own risky investments.
Plaintiffs' lawyers last week reached a deal with the FTX bankruptcy estate over who owns the rights to sue on behalf of customers of the crypto exchange.
Moskowitz said the deal was reached independently of the investors' decision to drop the lawsuit against Sullivan & Cromwell.
FTX received court approval for its bankruptcy plan on Monday, which will allow it to fully repay customers using up to $16.5 billion in assets recovered since the once-leading crypto exchange collapsed.
The case is In Re: FTX Cryptocurrency Exchange Collapse Litigation, U.S. District Court for the Southern District of Florida, 1:23-md-03076
Reporting by David Thomas
Pinakabagong Balita
Disclaimer: Ang mga kabilang sa XM Group ay nagbibigay lang ng serbisyo sa pagpapatupad at pag-access sa aming Online Trading Facility, kung saan pinapahintulutan nito ang pagtingin at/o paggamit sa nilalaman na makikita sa website o sa pamamagitan nito, at walang layuning palitan o palawigin ito, at hindi din ito papalitan o papalawigin. Ang naturang pag-access at paggamit ay palaging alinsunod sa: (i) Mga Tuntunin at Kundisyon; (ii) Mga Babala sa Risk; at (iii) Kabuuang Disclaimer. Kaya naman ang naturang nilalaman ay ituturing na pangkalahatang impormasyon lamang. Mangyaring isaalang-alang na ang mga nilalaman ng aming Online Trading Facility ay hindi paglikom, o alok, para magsagawa ng anumang transaksyon sa mga pinansyal na market. Ang pag-trade sa alinmang pinansyal na market ay nagtataglay ng mataas na lebel ng risk sa iyong kapital.
Lahat ng materyales na nakalathala sa aming Online Trading Facility ay nakalaan para sa layuning edukasyonal/pang-impormasyon lamang at hindi naglalaman – at hindi dapat ituring bilang naglalaman – ng payo at rekomendasyon na pangpinansyal, tungkol sa buwis sa pag-i-invest, o pang-trade, o tala ng aming presyo sa pag-trade, o alok para sa, o paglikom ng, transaksyon sa alinmang pinansyal na instrument o hindi ginustong pinansyal na promosyon.
Sa anumang nilalaman na galing sa ikatlong partido, pati na ang mga nilalaman na inihanda ng XM, ang mga naturang opinyon, balita, pananaliksik, pag-analisa, presyo, ibang impormasyon o link sa ibang mga site na makikita sa website na ito ay ibibigay tulad ng nandoon, bilang pangkalahatang komentaryo sa market at hindi ito nagtataglay ng payo sa pag-i-invest. Kung ang alinmang nilalaman nito ay itinuring bilang pananaliksik sa pag-i-invest, kailangan mong isaalang-alang at tanggapin na hindi ito inilaan at inihanda alinsunod sa mga legal na pangangailangan na idinisenyo para maisulong ang pagsasarili ng pananaliksik sa pag-i-invest, at dahil dito ituturing ito na komunikasyon sa marketing sa ilalim ng mga kaugnay na batas at regulasyon. Mangyaring siguruhin na nabasa at naintindihan mo ang aming Notipikasyon sa Hindi Independyenteng Pananaliksik sa Pag-i-invest at Babala sa Risk na may kinalaman sa impormasyong nakalagay sa itaas, na maa-access dito.
