US bankruptcy watchdog opposes FTX's choice of law firm: Sullivan & Cromwell failed to avoid conflicts of interest

On January 13, the appointed representative Andrew Vara in the United States submitted documents opposing the current law firm Sullivan & Cromwell, also known as S&C, representing FTX due to a conflict of interest with FTX.

Bankruptcy Supervisory Agency Questions Impartiality

The United States Bankruptcy Supervisory Agency, known as the TRUSTEE PROGRAM, is a bankruptcy oversight program under the Department of Justice. Its mission is to promote the integrity and efficiency of the bankruptcy system, and to safeguard the interests of debtors, creditors, and the public.

Andrew Vara, a trustee under the Trustee Program, believes that S&C cannot meet the bankruptcy law's standard of no conflict of interest. This is because FTX's general counsel, Ryne Miller, previously worked at S&C for eight years, and was a partner at S&C until 18 months before FTX filed for bankruptcy.

In addition, S&C has not disclosed the services it provided to FTX, including during FTX's collapse.

Previously Opposed Sale of LedgerX, FTX Japan, and FTX Europe

Earlier in January, United States trustee Andrew Vara also raised objections to FTX Group's proposed sale of LedgerX, FTX Japan, and FTX Europe.

He argued that the sale should not be allowed until a comprehensive and independent investigation of all individuals and entities involved is conducted to prevent overlooking any potentially prosecutable conduct.