Binance Says Sullivan & Cromwell, FRA To Serve As Monitors

By Aislinn Keely

Crypto exchange Binance said Monday that the federal government has selected a Sullivan & Cromwell LLP partner and a Forensic Risk Alliance founding partner to serve as independent third-party monitors overseeing its compliance with the terms of its $4.3 billion settlement and guilty plea over money laundering, bank fraud and sanctions violations.



Sullivan & Cromwell Seeks To Ax Claims Of Aiding FTX Fraud

By Madison Arnold

Sullivan & Cromwell LLP wants a Florida federal court to dismiss a proposed class action alleging the firm knew about and helped facilitate the massive fraud by FTX, saying customers of the cryptocurrency exchange platform fail to claim anything beyond a "series of speculative allegations with no factual basis."

 Motion attached | Read full article » | Save to favorites »



Wall Street’s Go-To Law Firm, Sullivan & Cromwell, Got in Bed with Crypto; Now Its Reputation Is Being Hammered


https://wallstreetonparade.com/2024/03/wall-streets-go-to-law-firm-sullivan-now-its-reputation-is-being-hammered/ 

By Pam Martens and Russ Martens: March 25, 2024 ~

Ryne Miller, Former Sullivan & Cromwell Partner; Now General Counsel of FTX.US
Ryne Miller, Former Sullivan & Cromwell Partner Who Became General Counsel of FTX.US

Since January, the reputation of Wall Street’s go-to law firm, Sullivan & Cromwell, has been repeatedly hammered. It all stems from the law firm’s decision some years ago to involve itself in legal representations of crypto firms and/or their principals – an industry that 1,600 of the brightest scientific minds in technology have called a sham.

On January 19, the Third Circuit Court of Appeals sharply rebuked the law firm’s position that it didn’t need an independent watchdog appointed by the U.S. Department of Justice to oversee the way it was handling the collapsed crypto house of frauds (known as FTX) in bankruptcy proceedings – despite it having significant conflicts of interests in the matter, such as previously providing legal representation to the mastermind of the fraud, Sam Bankman-Fried.

On February 16, a federal lawsuit was filed against the law firm alleging civil conspiracy, aiding and abetting fraud, aiding and abetting breach of fiduciary duty, and violations of civil federal racketeering law in regard to its work for FTX, which had looted customer funds to the tune of billions of dollars.

This month Sullivan & Cromwell is the subject of a scathing academic review related to its work for FTX by two law professors, Jonathan Lipson of Temple University-Beasley School of Law and David Skeel of the University of Pennsylvania Carey Law School. The law professors name names – including the alleged activities of key law partners at Sullivan & Cromwell related to FTX.

Last year, Wall Street On Parade wrote 20 articles focusing on the glaring conflicts of Sullivan & Cromwell in the FTX matter. Common sense indicated it had rendered itself unfit for the role of lead counsel in the FTX bankruptcy proceeding. (See a relevant sample in Related Articles below.) We also provided much needed sunshine on the peculiar willingness of the presiding Judge, John Dorsey of the U.S. Bankruptcy Court for the District of Delaware, to sign off on a litany of orders that S&C requested as it enriched itself to the tune of $180 million in legal fees from the FTX bankruptcy proceedings in his court.

To even casual observers, Sullivan & Cromwell’s conflicts in the FTX case were stunning.

One of Sullivan & Cromwell’s law partners, Ryne Miller, had moved to FTX.US and became its General Counsel. Another former Sullivan & Cromwell lawyer, Tim Wilson, became General Counsel for FTX Ventures, the venture capital arm of FTX. Sullivan & Cromwell had not only previously represented Sam Bankman-Fried, who was convicted in November 2023 on seven counts of fraud and conspiracy, but it had also previously represented the Head of Engineering at FTX, Nishad Singh, who pled guilty to fraud charges.

According to Sullivan & Cromwell’s own bankruptcy court declaration, it had been involved in more than 20 legal engagements for FTX before it filed for bankruptcy on November 11, 2022. According to the declaration, the law firm’s legal work began 15 months prior to the collapse of FTX.

Sullivan & Cromwell’s conflicts with FTX and its demand to be appointed lead counsel in the bankruptcy case were so suspicious that in January of last year four sitting U.S. Senators (Elizabeth Warren (D-MA), John Hickenlooper (D-CO), Thom Tillis (R-NC) and Cynthia Lummis (R-WY)) sent a letter to Judge Dorsey. Senator Hickenlooper Tweeted a link to the letter with the comment: “Get this: FTX’s legal advisors *pre-collapse* want to be appointed to oversee investigations INTO the collapse.”

The Senators’ letter drilled down as follows:

“To name just one challenge: will the firm’s lawyers be able to effectively investigate their current and former partners who were central in FTX’s conduct? Additionally, given their longstanding legal work for FTX, they may well bear a measure of responsibility for the damage wrecked on the company’s victims. Put bluntly, the firm is simply not in a position to uncover the information needed to ensure confidence in any investigation or findings.”

That assessment was perhaps too gentle according to the federal lawsuit filed in February against Sullivan & Cromwell by the Moskowitz Law Firm on behalf of 16 customers of the FTX crypto platform. Among the allegations in the lawsuit are the following:

“…from November 2022 to mid-January 2024, S&C’s income from matters just related to FTX has surged, exceeding $180 million — or 10% of the total revenue the 900-lawyer firm publicly stated it collected in all of 2022 — with paralegals billing $595/hr. and partners billing up to $2,165/hr.”

“S&C attorneys served as the primary legal services providers for the RICO enterprise, assisting in the structuring of the enterprise operations.”

“When the FTX fraud was revealed in November 2022, Mr. Miller and S&C moved to consolidate power over the FTX Group without delay, quickly ousting SBF [Sam Bankman-Fried] and his lieutenants and appointing in their stead hand-picked successors to navigate FTX through the bankruptcy process. S&C’s post-collapse maneuvering seems particularly calculated, given that S&C was well positioned to see the collapse coming, via knowledge gleaned from prior engagements.”

“Mr. Miller and S&C moved to divert the $250 million FTX Guaranty Fund from LedgerX, one of the few entities S&C specifically chose not to include among the over 100 FTX entities it forced into bankruptcy, in order to secure receipt of a multi-million-dollar retainer to S&C before the FTX Group filed for bankruptcy, presumably to improve the Firm’s revenues throughout the extensive FTX bankruptcy process. With S&C’s assistance, SBF [Sam Bankman-Fried] and FTX caused billions in losses to Plaintiffs through at least two separate schemes, both of which contributed to the downfall of the FTX Group.”

Notwithstanding the myriad conflicts, Judge Dorsey was all-in on Sullivan & Cromwell becoming lead counsel in the FTX bankruptcy. When Sullivan & Cromwell argued against allowing the U.S. Department of Justice’s U.S. Trustee to appoint an independent examiner – a legally mandated position for bankruptcy cases exceeding $5 million — Judge Dorsey sided with the law firm.

Dorsey’s decision was sharply rebuked by the Third Circuit Court of Appeals on January 19. The court wrote:

“Under the Bankruptcy Court’s interpretation, the appointment of an examiner under either subsection of Section 1104(c) would be subject to a court’s discretion and a judge would have the final say as to whether an investigation was warranted. But this interpretation runs counter to the statute’s plain language and established canons of construction.”

The Appeals Court also insightfully noted the following:

“First, an examiner must be ‘disinterested’… This requirement of disinterest is particularly salient here, where issues of potential conflicts of interest arising from debtor’s counsel serving as pre-petition advisors to FTX have been raised repeatedly….”

The U.S. Trustee has tapped Robert Cleary of law firm Patterson Belknap as its independent examiner to conduct the FTX investigation. Cleary is a former U.S. Attorney for the District of New Jersey and the Southern District of Illinois and a former Assistant U.S. Attorney in the Southern District of New York. One of the areas that Cleary will examine is if Sullivan & Cromwell’s conflicts were adequately addressed prior to its appointment as lead counsel and if it failed to disclose any material conflicts.

Sullivan & Cromwell ranks among the oldest law firms in America. It was founded 145 years ago by Algernon Sydney Sullivan and William Nelson Cromwell in the financial district of lower Manhattan. During the Wall Street crisis of the 1930s, Sullivan & Cromwell built a reputation for defending Wall Street firms against shareholder lawsuits and antitrust actions. Sullivan & Cromwell also played a pivotal role in the 2008 financial crisis, the worst since the Great Depression. As Wall Street On Parade previously detailed, the firm’s Senior Chair, Rodge Cohen, paved the way for the Fed’s unprecedented $29 trillion bailout of Wall Street banks after their corrupt activities collapsed the U.S. economy in 2008.

Why Sullivan & Cromwell decided to leap with both feet into the dodgy world of crypto will, hopefully, inspire another academic paper very soon.

Related Articles:

No One Trusts the FTX Bankruptcy Case: News Outlets Intervene; Justice Department Trustee Demands Independent Examiner; SEC Orders Disclosures

A Sam Bankman-Fried Company Loaned or Invested More than $1 Billion in Clients of its Law Firm, Sullivan & Cromwell

Bombshell Emails Raise Questions about What Sullivan & Cromwell Knew about Fraud at Sam Bankman-Fried’s Crypto Firms


---------- Forwarded message ---------
From: Gunnar Larson <g@xny.io>
Date: Fri, May 10, 2024, 11:00 AM
Subject: Fwd: Your Freedom of Information Law (FOIL) Request FOIL-2024-097305-022242 - Crypto's Most Powerful Regulator - Adrienne Harris Recusal Records
To: Katerina Ramoutsaki <ramoutsaki.k@unic.ac.cy>
Cc: Antonis Polemitis <polemitis.an@unic.ac.cy>, Elena Kontemeniotis <kontemeniotis.e@unic.ac.cy>, Reader, Shaun <sreader@curtis.com>, <cypherpunks@cpunks.org>, Harris, Adrienne A (DFS) <Adrienne.Harris@dfs.ny.gov>, <letitia.james@ag.ny.gov>


Dear Katerina:

I hope this email finds you well.

The email below from New York State does not allow me to take the quiz this weekend for religious purposes, as it says "In God We Trust" on the United States Dollar.

Can I please request an extension to the MOOC Quiz scheduled this weekend? I would like to take the quiz on June 10, 2024.

I do not feel comfortable taking the MOOC Quiz until New York State is clear with xNY.io - Bank.org on the recusal status of the DFS Superintendent. 

Katerina, without these crypto recusal records the MSc and UNIC in Cyprus would have been taken advantage of. 

xNY.io - Bank.org respectfully reserves all rights. 

Warm regards,

Gunnar 

--

Gunnar Larson 

xNY.io | Bank.org

MSc - Digital Currency 

MBA - Entrepreneurship and Innovation (ip)

 

G@xNY.io

+1-917-580-8053 

New York, New York 10001 


---------- Forwarded message ---------
From: <Idel.Lendoff@dfs.ny.gov>
Date: Fri, May 10, 2024, 10:41 AM
Subject: Your Freedom of Information Law (FOIL) Request FOIL-2024-097305-022242
To: <G@xny.io>, <Pascale.JeanBaptiste@dfs.ny.gov>


Good morning,

Attached please find correspondence from the NYS Department of Financial Services, pertaining to your FOIL request.

 

Thank you.

Tracking Number:FOIL-2024-097305-022242


SENT VIA EMAIL

G@xny.io

May 10, 2024

Gunnar D. Larson

406 W. 25th Street 

New York, NY 10001

Re: Freedom of Information Law (“FOIL”) Tracking No. 2024-097305

Dear Gunnar D. Larson: 

I write in response to the FOIL request that you submitted to The New York State Department of 

Financial Services (“Department”), which has been assigned tracking number 2024-097305. The 

Department requires additional time to respond to your FOIL request because we are still 

working on your request. 

The Department intends to provide its determination of your request by June 10, 2024. 

Thank you.


2024-097305: 3/11/24: Dear Madam or Sir: On March 30, 2022 New York Magazine published a profile of NY-DFS Superintendent Adrienne Harris titled "Crypto’s Most Powerful Regulator Is Here Adrienne Harris, New York’s financial watchdog, has enormous sway over the industry’s future" (https://nymag.com/intelligencer/2022/03/adrienne-harris-is-cryptos-most-powerful-regulator.html). The profile of Superintendent Harris quotes "... that she would recuse herself from any dealings with companies she has conflicts with." xNY.io - Bank.org seeks access to any and all records specific to Superintendent Harris' recusal(s) as of February 1, 2024. Thank you, Gunnar -- Gunnar Larson xNY.io | Bank.org MSc - Digital Currency MBA - Entrepreneurship and Innovation (ip) G@xNY.io +1-917-580-8053 New York, New York 10001