Former FTX chief lawyer claims US legal counsel channeled business to S&C

The former chief regulatory officer of FTX has supported a motion that would stop FTX from using Sullivan & Cromwell LLC as its lead bankruptcy counsel.

A former FTX chief lawyer has accused the company’s US general counsel of channeling business to Sullivan & Cromwell (S&C) — the firm currently serving FTX as bankruptcy counsel.

Daniel Friedberg, who was the chief regulatory officer of FTX until he resigned on Nov. 8, made the allegations as part of a Jan 19. court filing.

The filing was a declaration in support of an FTX creditor’s objection to FTX’s plan to continue using S&C as its lawyers throughout its bankruptcy case.

In the declaration, Friedberg alleges that FTX.US lead counsel Ryne Miller, a former partner at S&C channeled business towards his former law firm across numerous cases, with Friedberg stating:

“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.”

Friedberg claims in the filing that he reminded Miller that his “allegiance” was to the debtor and not to S&C which he suggested “continued to be a problem throughout his work” at FTX.

Friedberg alleged after Miller’s hiring in early 2020, Miller asked whether he could hire his former law firm, to which Friedberg replied by saying it was Miller’s job “to only hire the best outside counsel for the job.”

Miller ended up engaging S&C to be primary counsel for FTX.US, FTX Derivatives (formerly LedgerX), and Sam Bankman-Fried’s holding company Emergent, wrote Friedberg.

He noted that S&C has also acted as personal counsel to Bankman-Fried and another key FTX executive, Nishad Singh.

Related: FTX CEO says he is exploring rebooting the exchange: Report

While the filing is simply a declaration in support of an FTX creditors objection to the retention of FTX lawyers Sullivan & Cromwell LLP, it makes a number of accusations which were previously undisclosed.

Well, I just finished reading the Declaration of Daniel Friedberg.

It is fair to say that this is one of the more shocking sworn statements I have read in a good long while.

If half of what Mr. Friedberg says is true, he has just blown the top off of this bankruptcy case.

— MetaLawMan (@MetaLawMan) January 19, 2023