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FTX lawyers accuse Sam Bankman-Fried of 'Twitter attack'

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FTX lawyers accused Sam Bankman-Fried of trying to stop the bankruptcy process of his crypto empire through a “Twitter attack”.

In recent weeks, Bankman-Fried has accused in several tweets and blog posts Sullivan & Cromwell, the law firm representing FTX in its Chapter 11 lawsuit, of putting him under pressure to bankrupt companies, including the American arm of FTX, that the former billionaire’s claims were solvent. The company denied these allegations.

James Bromley, a partner at Sullivan and Cromwell, said at a court hearing on Friday that the firm is “fighting a ghost” as it tries to respond to public criticism of Bankman-Fried over her role representing FTX in the bankruptcy without being able to question it. it on the square.

“One of the things that debtors often face in these cases is the Twitter attack,” said Bromley.

The comments came at a hearing in which the bankruptcy court considered a motion from two FTX clients seeking to block Sullivan’s appointment because of what they claimed were conflicts of interest generated by the company’s past work for the crypto group.

The judge ended up denying the request. “There is no evidence of any real conflict here,” said Judge John Dorsey.

The decision paves the way for Sullivan to earn potentially millions of dollars in fees representing FTX as it attempts to reimburse account holders. Dorsey noted that FTX hired other law firms that could be called upon in the event of a conflict.

Bromley’s hearing and comments point to how the high-profile FTX case and the social media storm surrounding it will complicate efforts to restructure the cryptocurrency exchange and return money owed to millions of creditors.

Another former FTX employee, its lead attorney, Dan Friedberg, on Thursday filed new charges against Sullivan over alleged conflicts of interest in a last-minute court filing ahead of the hearing. The judge described the proceedings as full of “bulls, speculation and rumours” and “not something I would allow to be admitted into evidence”.

Earlier this week, Sullivan provided dozens of pages of extra detail about the nearly $10 million legal work he performed for the Bankman-Fried companies before they were placed in bankruptcy protection last year. Two former Sullivan attorneys also held senior legal positions at FTX.

Bromley said on Friday that the company should have been more open from the start in disclosing the extent of its past ties to the bankrupt crypto group. “In hindsight, Your Honor, we should have gone further in the original statement,” he told the court.

He also alleged that Bankman-Fried, who has pleaded not guilty to the US fraud charges, and other insiders who have “brought the company to its knees” are concerned about the information Sullivan is providing to prosecutors and regulators.

“They can throw stones at debtor attorneys who are providing information to prosecutors,” he said.

The US Department of Justice objected to the company’s initial disclosure about its work for FTX and pressed for more information. Government lawyers said on Friday they were satisfied with the extra details provided by Sullivan.

Sullivan and Bankman-Fried declined to comment.

Separately on Friday, US prosecutors confirmed they seized about $700 million in cash and Bankman-Fried stock, including more than $500 million worth of stock in trading platform Robinhood.

The seizure, detailed in a court filing, also includes funds held in three accounts on cryptocurrency exchange Binance, the amounts of which were not disclosed.

The busts took place in recent weeks, the government revealed, while Bankman-Fried was under house arrest in California after being released on $250 million bail. He faces eight criminal charges.

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