Sullivan & Cromwell LLP, the law firm FTX tapped to steer it through bankruptcy, is facing scrutiny from federal lawmakers over whether its lawyers knew about problems at the cryptocurrency exchange before the company collapsed and co-founder Sam Bankman-Fried was charged with fraud, WSJ Pro Bankruptcy reported. A bipartisan group of U.S. senators said in a letter Monday that Sullivan & Cromwell should disclose whether its lawyers suspected fraud at FTX or had concerns about the company’s lacking appropriate legal controls before it filed for chapter 11 in early November. Law firms seeking to work in chapter 11 are required under bankruptcy rules to disclose any past representations that could pose a conflict of interest before they can be officially retained. Sullivan & Cromwell worked for FTX before its collapse, charging more than $8.5 million in legal fees before the bankruptcy, according to the law firm’s retention application. Companies commonly use existing law firms to handle bankruptcy filings, but the arrest of Mr. Bankman-Fried and other former FTX executives has drawn lawmakers’ attention to Sullivan & Cromwell’s prior work for the exchange. Four U.S. senators cited their concerns with the law firm in a letter urging Judge John Dorsey of the U.S. Bankruptcy Court in Wilmington, Del., who is overseeing the FTX case, to appoint an independent examiner to review how and why FTX failed.
