FTX investors Sue Sullivan & Cromwell for alleged fraud complicity

A proposed investor class action lawsuit alleges powerful law firm Sullivan & Cromwell participated in defunct cryptocurrency exchange FTX’s fraud before later enriching itself as FTX’s bankruptcy counsel.

Filed Friday in Miami federal court, the suit will proceed as part of multi-district litigation over the November 2022 FTX bankruptcy. Investors claim Sullivan & Cromwell did pre-collapse legal work for FTX, granting unique insight into FTX’s “lack of internal controls and dubious practices”.

Since being approved as bankruptcy counsel, Sullivan & Cromwell has earned over $180 million in fees – about 10% of its 2022 revenue. Investors argue this reveals the firm spotted an opportunity for further profit despite alleged knowledge of FTX’s troubles.

Sullivan & Cromwell maintains its pre-bankruptcy relationship was “limited” and that it never served as FTX’s primary counsel. The firm defends its work to date amid accusations over conflicts of interest from investors and lawmakers.