FTX lawyers have accused Sam Bankman-Fried of trying to disrupt his crypto empire’s bankruptcy process through “Twitter assault.”
In recent weeks, Bankman-Fried has, in numerous tweets and blog posts, accused Sullivan & Cromwell, the law firm representing FTX in its Chapter 11 proceedings, of pressuring him to rush companies to bankrupt, including the US arm of FTX, which the former billionaire claims was solvent. The company has denied these allegations.
James Bromley, an associate of Sullivan and Cromwell, told a court hearing on Friday that the company was “fighting a ghost” in trying to address public criticism of Bankman-Fried over his role representing FTX in the bankruptcy without being able to interrogate it in searching.
“One of the things that debtors have typically faced in these cases is assault by Twitter,” Bromley said.
The comments came during a hearing in which the bankruptcy court considered a motion from two FTX clients who sought to block Sullivan’s appointment due to what they claimed were generated conflicts of interest. by the company’s past work for the crypto group.
The judge ultimately denied the motion. “There is no evidence of an actual conflict here,” Judge John Dorsey said.
The decision paves the way for Sullivan to potentially earn millions of dollars in fees representing FTX as he attempts to reimburse account holders. Dorsey noted that FTX had hired other law firms that could be called upon in the event of a dispute.
Bromley’s hearing and comments show how the high-profile FTX case and the social media storm surrounding it will complicate efforts to restructure the crypto exchange and return money owed to millions of creditors.
Another former FTX insider, its top lawyer, Dan Friedberg, on Thursday filed new charges against Sullivan over alleged conflicts of interest in a late-breaking court filing ahead of the hearing. The judge described the case as filled with “hearsay, speculation and rumour” and “not something I would allow into evidence”.
Earlier this week, Sullivan filed dozens of pages of additional details about nearly $10 million worth of legal work he did for the Bankman-Fried companies before they were placed under bankruptcy protection last year. Two former Sullivan attorneys also held senior legal positions at FTX.
Bromley said on Friday the company should have been more open from the start in disclosing the extent of its past ties to the failing crypto group. “In retrospect, Your Honor, we should have gone further in the original statement,” he told the court.
He also claimed that Bankman-Fried, who pleaded not guilty to fraud charges in the United States, and other insiders who “brought the company to its knees” are concerned about the information Sullivan is providing to prosecutors and prosecutors. regulators.
“They can throw stones at debtors’ lawyers who provide information to prosecutors,” he said.
The US Department of Justice had objected to the company’s initial disclosure of its work for FTX and requested more information. Government lawyers said Friday they were satisfied with the additional details provided by Sullivan.
Sullivan and Bankman-Fried declined to comment.
Separately on Friday, US prosecutors confirmed they had seized around $700 million in cash and Bankman-Fried stock, including more than $500 million worth of shares in trading platform Robinhood.
The transport, detailed in a court filing, also includes funds held in three accounts on the Binance cryptocurrency exchange, the values of which were not disclosed.
The seizures took place in recent weeks, the government has revealed, as Bankman-Fried was under house arrest in California after being released on $250 million bail. He faces eight criminal charges.