FTX Lawyer Accuses US General Counsel of Channeling Business to Former Firm

• Former FTX chief lawyer Daniel Friedberg has accused the company’s US general counsel, Ryne Miller, of channeling business to his former law firm, Sullivan & Cromwell.
• This accusation was made as part of a court filing on Jan 19.
• John Reed Stark, a former chief of the Securities and Exchange Commission Office of Internet Enforcement, highlighted the magnitude of the allegation in a Jan. 20 tweet.

A former chief lawyer for FTX has recently made allegations that the company’s US general counsel had been channeling business towards his former law firm, Sullivan & Cromwell. Daniel Friedberg, who was the chief regulatory officer of FTX until he resigned on Nov. 8, made the accusations as part of a Jan 19. court filing.

Friedberg claims in the filing that he had reminded Miller that his “allegiance” was to the debtor and not to S&C, but this issue “continued to be a problem throughout his work” at FTX. Friedberg went on to allege in the declaration that Miller had informed him that it was “very important” for him personally to channel a lot of business to S&C as he wanted to return there as a partner after his stint at the Debtors.

The magnitude of the allegation was highlighted in a Jan. 20 tweet by John Reed Stark, a lawyer and former chief of the U.S. Securities and Exchange Commission Office of Internet Enforcement. Stark noted that there would be a hearing before the FTX Bankruptcy Judge John Dorsey on the engagement of Sullivan & Cromwell, and if Friedberg’s declaration was true, he could not imagine any circumstance where the FTX Trustee would be allowed to engage Sullivan & Cromwell for any purpose.

Friedberg’s declaration has raised questions about the integrity of FTX’s legal counsel, and whether the company was properly represented in its dealings with Sullivan & Cromwell. The full implications of Friedberg’s allegations have yet to be seen, and the hearing on Jan. 21 will be closely watched to see how the court responds.