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A Sullivan & Cromwell spokesperson said in a statement that the firm is "pleased that the plaintiffs have withdrawn their meritless claims unconditionally, and our focus remains on returning billions of dollars in recovered assets to FTX’s creditors."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
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Penafian: Entiti XM Group menyediakan perkhidmatan pelaksanaan sahaja dan akses ke Kemudahan Dagangan Atas Talian, yang membolehkan sesorang melihat dan/atau menggunakan kandungan yang ada di dalam atau melalui laman web, tidak bertujuan untuk mengubah atau memperluas, juga tidak mengubah atau mengembangkannya. Akses dan penggunaan tersebut tertakluk kepada: (i) Terma dan Syarat; (ii) Amaran Risiko; dan Penafian Penuh. Oleh itu, kandungan sedemikian disediakan tidak lebih dari sekadar maklumat umum. Terutamanya, perlu diketahui bahawa kandungan Kemudahan Dagangan Atas Talian bukan permintaan, atau tawaran untuk melakukan transaksi dalam pasaran kewangan. Berdagang dalam mana-mana pasaran kewangan melibatkan tahap risiko yang besar terhadap modal anda.
Semua bahan yang diterbitkan di Kemudahan Dagangan Atas Talian kami bertujuan hanya untuk tujuan pendidikan/maklumat dan tidak mengandungi – dan tidak boleh dianggap mengandungi nasihat kewangan, cukai pelaburan atau dagangan dan cadangan, atau rekod harga dagangan kami, atau tawaran, atau permintaan untuk suatu transaksi dalam sebarang instrumen kewangan atau promosi kewangan yang tidak diminta kepada anda.
Sebarang kandungan pihak ketiga serta kandungan yang disediakan oleh XM, seperti pendapat, berita, penyelidikan, analisis, harga, maklumat lain atau pautan ke laman web pihak ketiga yang terdapat dalam laman web ini disediakan berdasarkan "seadanya" sebagai ulasan pasaran umum dan bukanlah nasihat pelaburan. Sesuai dengan apa-apa kandungan yang ditafsir sebagai penyelidikan pelaburan, anda mestilah ambil perhatian dan menerima bahawa kandungan tersebut tidak bertujuan dan tidak sediakan berdasarkan keperluan undang-undang yang direka untuk mempromosikan penyelidikan pelaburan bebas dan oleh itu, ia dianggap sebagai komunikasi pemasaran di bawah peraturan dan undang-undang yang berkaitan. SIla pastikan bahawa anda telah membaca dan memahami Notifikasi mengenai Penyelidikan Pelaburan Bukan Bebas dan Amaran Risiko mengenai maklumat di atas yang boleh diakses di sini.
