Defrauded investors have brought a legal action against law firm Sullivan & Cromwell for its alleged part in the FTX fraud scandal amounting to billions of dollars. According to Bloomberg, the investor complaint claimed that the legal services of Sullivan & Cromwell “went well beyond those a law firm should and ordinarily” offer. The complainants alleged that the legal outfit created “misleading strategies that furthered FTX’s misconduct”.
Investors suing law firm for its part in FTX fraud scandal
The law firm consented to assisting FTX and disgraced founder Sam Bankman-Fried with several legal matters for more than a year before the cryptocurrency exchange collapsed. The Moskowitz Law Firm launched the legal complaint on Friday, 16 February 2024. This is the same firm that acted on behalf of former investors against celebrities such as Tom Brady for endorsing FTX.
Based on investor allegations, Sullivan & Cromwell had inside knowledge of the fraud being committed as it knew where customer funds were being siphoned to and was aware of the illegality of these actions. Previously, FTX investors also launched legal actions against Fenwick & West, which acted as lead corporate counsel for the crypto exchange. Private equity firms Sequoia Capital, Thoma Bravo and Paradigm also face legal claims from FTX investors.
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In November last year, Bankman-Fried was found guilty of fraud. He illegally channelled FTX customer funds into a hedge fund, from where he used the money for risky financial ventures, political donations and luxury purchases.
Established in 1879, Sullivan & Cromwell is one of the most prominent law firms in the US. Apart from its FTX associations, the firm has come under the spotlight for its interest in digital asset companies such as Coinbase.
