Key Points
- US District Judge Ronnie Abrams has stepped down from the Sam Bankman-Fried case.
- The bankruptcy lawyers got $12 million in retainer fees.
- Former Alameda CEO Caroline Ellison said they concealed the extent of the crypto trading firm’s borrowing.
Judge Abrams recused herself due to potential conflict of interest involving husband’s firm and past work with FTX. SBF partner Ellison pleads guilty and cooperates with authorities.
A series of legal developments have occurred in the case involving Sam Bankman-Fried (SBF) and bankrupt exchange FTX. Judge Ronnie Abrams has recused herself due to a potential conflict of interest involving her husband’s law firm, which had previously advised FTX.
SBF partner Caroline Ellison has also pleaded guilty to several charges and is cooperating with authorities. The outcome of the trial, which many expect will result in SBF being imprisoned. It is now in the hands of a new judge who will need to be appointed. Prior to her recusal, Judge Abrams had granted SBF bail in the amount of $250 million and placed him under house arrest at his parents’ California mansion.
Caroline Ellison Co-operating With the Authorities
Meanwhile, SBF partners have started cooperating with authorities after pleading guilty to several charges. CEO of Alameda, Caroline Ellison, pleaded guilty to seven counts ranging from conspiracy to commit wire fraud to conspiracy to commit money laundering.
FTX co-founder and CEO Gary Wang also pleaded guilty to four counts, all conspiracy to commit several forms of fraud.
The two are now cooperating with prosecutors. Ellison told the judge that she agreed with SBF to hide the fact that Alameda borrows unlimited sums from FTX from the exchange investors, customers, and lenders.
FTX Bankruptcy Lawyers Paid $12M Retainer Fee
Bankrupt crypto exchange FTX paid the law firm representing it in the bankruptcy lawsuit $12 million, according to the latest court filing.
The exchange filed for bankruptcy on November 11, and the filing disclosed that it paid a $12 million retainer fee to Sullivan & Cromwell law firm just before the filing. So far, the law firm has only drawn $3 million, mostly for its work in filing the bankruptcy.
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Another court filing revealed that other law firms are working for FTX and have received money from the exchange for their services. These include Quin Emmanuel and, Landis Rath & Cobb.
Quin Emmanuel is serving as special counsel for FTX and its board of directors for any litigation action that bankruptcy estate might bring and has received $575k within three months leading to the filing.
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Meanwhile, Landis Rath & Cobb is the local attorney for FTX in Delaware and got $300k as a retainer in the three months before the bankruptcy.Both Quin Emmanuel and Sullivan & Cromwell had represented FTX before the bankruptcy. Between July 2021 and this year, Sullivan & Cromwell received about $8.5 million in fees unrelated to bankruptcy filing from FTX.
Sam Bankman-Fried had planned to inform Congress in his testimony that Sullivan & Cromwell is one of the exchange’s primary law firms, but the law firm denied this, stating that its work with FTX bordered mostly on acquisition transactions and regulatory inquiries.
Similarly, Quin Emmanuel has disassociated itself from SBF, stating that although it signed an engagement letter with the disgraced CEO, it never worked with him, and he is longer their client.
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