A Shocking Accusation from Within
In the latest courtroom drama surrounding FTX, a former chief lawyer has dropped a bombshell accusation against the company’s current general counsel. Daniel Friedberg, who once held the title of chief regulatory officer at FTX, has alleged that Ryne Miller, currently FTX’s U.S. lead counsel and a former partner at Sullivan & Cromwell (S&C), has been steering business towards his old law firm.
The Heart of the Matter
Friedberg’s declaration, filed with the court on January 19, makes a bold claim: Miller’s actions were driven by a personal agenda to return to S&C as a partner after his time at FTX. “Mr. Miller informed me that it was very important for him personally to channel a lot of business to S&C,” Friedberg stated. If this doesn’t sound like something out of a legal thriller, I don’t know what does.
Understanding the Implications
John Reed Stark, former chief of the SEC’s Office of Internet Enforcement, weighed in on the severity of these claims via a tweet:
The timing of the hearing is crucial, and if Friedberg’s allegations hold weight, it could change everything for Sullivan & Cromwell’s involvement with FTX.
With a judge’s decision looming, Stark’s comments may indicate a suggestion to reconsider S&C’s role in FTX’s ongoing bankruptcy proceedings.
Friedberg vs. Miller: The Conflict
Friedberg elaborated on the internal tug-of-war, asserting that he repeatedly reminded Miller that his loyalty lay with FTX’s debtors, not with S&C. However, this conflict seemed to plague Miller’s tenure. After Miller’s hiring in 2020, he pushed Friedberg to engage S&C for various legal services. Friedberg pointed out that it was critical for Miller to prioritize the best legal representation for FTX instead.
Money Matters: The $200 Million Mystery
The intrigue intensifies with Friedberg’s revelation about a substantial sum of money. Allegedly, he claims that Miller earmarked a whopping $200 million from LedgerX funds specifically to cover S&C’s legal fees. Friedberg exclaimed, “there was over $200 million cash in LedgerX and that he was going to send these funds to S&C.” So much for keeping expenditures hush-hush!
What’s Next? A Legal Tipping Point
As the dynamics of these allegations unfold, Friedberg’s declaration has raised eyebrows among creditors and stakeholders alike. He expressed regret for the timing of his filing, noting unexpected delays due to another lawyer’s declaration supporting S&C’s role.
In closing, Friedberg affirmed his readiness to testify competently about the facts in his declaration, should he be called to court. With the next hearing scheduled for January 20, the wait is on to see if these allegations will alter the trajectory of FTX’s legal representation.
