FTX Lawsuit Against S&C: What You Need to Know

FTX Lawsuit- S&C Lawsuit: FTX Creditors Seek New Avenues for Recovery

FTX Lawsuit– FTX investors have officially withdrawn their proposed class-action lawsuit against the prominent U.S. law firm Sullivan & Cromwell (S&C). This decision marks a significant development in the ongoing legal proceedings surrounding the beleaguered cryptocurrency exchange.

Background of the Lawsuit

On February 16, a group of creditors associated with FTX initiated legal action against Sullivan & Cromwell. The lawsuit alleged that the law firm was complicit in FTX’s extensive fraud, claiming that S&C financially benefited from the multibillion-dollar scheme. The plaintiffs sought damages for civil conspiracy, aiding and abetting fiduciary breaches, and assisting in fraudulent activities.

Sullivan & Cromwell served as external counsel to FTX on various deals and has been overseeing the bankruptcy proceedings of the exchange. However, the case faced challenges due to insufficient evidence to substantiate the claims.

Dismissal and Its Implications

In a statement provided to Cointelegraph, Adam Moskowitz, the lead attorney representing the plaintiffs from the Moskowitz Law Firm, announced the voluntary dismissal of S&C as a defendant in the lawsuit. Moskowitz expressed optimism that this move would facilitate progress in the case, stating, We don’t think, based on the evidence, that we’ve seen that there’s enough here to state a cause of action, so we dismissed it. Now, as a consequence, we can sit down and work together and try to get the most recovery for the victims against the other third parties.

Moskowitz emphasized that this development is favorable for FTX creditors, as the focus will shift to seeking compensation from those directly responsible for the fraud. This is a great day for all FTX victims because working together with the Estate, we will try our best to provide every victim with 100% of their full damages from these 43 responsible parties, he added.

It’s important to note that the law firm clarified there was no settlement linked to the dismissal of the lawsuit.

Progress in Bankruptcy Proceedings

The withdrawal of the lawsuit coincides with a significant milestone in FTX’s bankruptcy case. On October 7, U.S. Bankruptcy Judge John Dorsey approved FTX’s reorganization plan. This plan aims to facilitate the winding down of operations while also working towards repaying creditors. Under this reorganization, debtors are set to repay approximately 119% of their claimed account value, which provides some reassurance to affected investors.

In conclusion, the decision to dismiss the lawsuit against Sullivan & Cromwell reflects a strategic move by FTX creditors to concentrate their efforts on obtaining restitution from the parties primarily responsible for the fraud. As the legal landscape continues to evolve, FTX’s creditors remain hopeful for a favorable resolution.