Bankster Crime

Exposing Fraud in the Banking System

3/26/24: Wall Street’s Go-To Law Firm, Sullivan & Cromwell, Got in Bed with Crypto; Now Its Reputation Is Being Hammered

Featured Story

By Pam Martens and Russ Martens:

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.


Give the gift of great skin care. Our Soap and Shave Bars are gentle and produce a smooth creamy lather that is nourishing to your skin. They are handmade in small batches. We use only high-quality natural ingredients that you can pronounce. No chemicals, no sodium laurel sulfate, no phthalates, no parabens, no detergents. The set can include Soap Bar, Shave Bar, Shave Brush, and/or Shampoo Bar. These come in a white box and are perfect for your gift giving needs.

Our soaps are made with skin loving ingredients including olive oil, coconut oil, lard, sweet almond oil, shea butter, and castor oil. We do not use palm oil. Scented only lightly with fragrance oils.

The Shave bars give a very close and smooth shave with no razor burn. They leave your skin feeling amazing. A lather can be built up in your hands and then applied to your face, but it is best to use a shaving brush. These bars will only produce a thick foam when used with a shaving brush.

Our Shampoo Bars have a thick lather. A lather can be built up in your hands and then applied to your hair, but it is best to rub the bar gently in your hair. Rinse and repeat.

You choose a scent:
A Thousand Dreams is a whimsical blue scented in a warm mix of fruity and floral notes with peach, peony, lily, musk, sandalwood, and amber.
Bay Rum Spice is a nice masculine scent similar to Old Spice. The scent notes are clove, pine needles, cedarwood, orange, vanilla, and musk.
Birch Woods is a great outdoors-type scent. The notes are bergamot, patchouli, vetiver, and tonka bean.
Cool Clear Water is a refreshing scent. The notes are crisp water, oakmoss, pine, cedar, and musk.
Lavender Champagne has a wonderful scent of Lavender and Champagne and has a light purple color. The scent notes are lavender, sparkling Champagne, grapefruit, orange, thyme, oak, and amber.
Midnight Waters is a moody-mystical scent that opens with fruity notes of red berries, juicy tangerine, and bergamot. Then unfolds into bubbly Champagne, violet flowers, cashmere, amber, and musk.
Raspberry Vanilla is an all-time favorite fragrance for soap. It is a beautiful magenta color. The scent notes are raspberry, strawberry, lemon, coconut, peach, honeysuckle, plum, and vanilla.
Warm Sandalwood is a warm, rich, and woodsy scent. The colors are warm and rich with brown, gold, and white.

A Soap bar will weigh approximately 4 ounces and be approximately 2.25 inches wide by 3.5 inches tall and 1 inch thick. A Shave bar will weigh approximately 3 ounces and be approximately 2.5 inches across and 1.25 inches thick. A Shampoo Bar will weigh approximately 3.5 ounces and be approximately 2.5 inches across and 1.25 inches thick. Please keep in mind that our products are handmade and hand cut. Each bar is unique and might vary slightly in shape, size, design, and color from those pictured.

Please keep your Soap Bars, Shave Bars, and Shampoo Bars well-drained and allow to dry between uses. This will ensure longer lasting bars. Go Shopping

Don't Miss

Second ex Barclays banker convicted in London Euribor re-trial

By StevieRay Hansen

It is the love of money, and not money itself, that is the problem. The love of money is a sin because it gets in…

Read More

Michael Avenatti fraud case shines a light on bankers, lawyers and money in Biloxi

By StevieRay Hansen

Why is the love of money a root of all kinds of evil? To help us answer this, we must look at the passage in…

Read More

Wells Fargo is the smallest of the four giants that now dominate the U.S. commercial banking business

By StevieRay Hansen

But it has surpassed its larger counterparts in the extent to which it has been embroiled in a series of scandals involving reckless lending practices…

Read More
Posted in

StevieRay Hansen

In his riveting memoir, "A Long Journey Home", StevieRay Hansen will lead you through his incredible journey from homeless kid to multimillionaire oilman willing to give a helping hand to other throwaway kids. Available on Amazon.

LEAVE A RESPONSE

Your email address will not be published. Required fields are marked *