In a letter sent to the court on January 9, four senators from both parties requested the court to appoint an independent examiner to investigate the actions of the defunct cryptocurrency exchange FTX.
The legislators noted that the law firm that is currently responsible for the job, Sullivan & Cromwell, has previously advised FTX on a variety of legal concerns, including “acquisition transactions and particular regulatory investigations relating to certain U.S. business lines.” They went on to say that the law firm also confirmed that it had charged FTX more than $8.5 million in legal costs prior to the company’s filing for bankruptcy protection.
Given the role that legal counsel plays in the drafting of financial agreements, risk management compliance practices, and corporate controls, it is perfectly reasonable to have concerns about the impartiality and manner in which Sullivan & Cromwell will approach any investigation of FTX. “As major financial scandals frequently involve legal counsel, given their role in drafting financial agreements, risk management compliance practices, and corporate controls,”
The parliamentarians believe that Sullivan & Cromwell is not an objective party in the case because the firm “advised FTX for years leading up to its collapse, and even one of its lawyers worked as FTX’s general counsel.” In addition to this, they brought up the fact that the question of the law firm’s level of engagement in FTX’s activities has not been answered.
To put it more clearly, the company is not in a position to unearth the facts required to assure that any inquiry or results can be trusted.
The senators made an appeal to Judge John Dorsey, pleading with him to back the U.S. Trustee’s Motion to appoint an independent examiner. The examiner would have “full authority and resources to conduct a thorough, objective investigation of the activities that led to the collapse of FTX,” according to the senator’s statement.
Senators John Hickenlooper, Thom Tillis, Elizabeth Warren, and Cynthia Lummis all put their names to the letter.
