The Ministry of Justice opposes the law firm tasked with investigating FTX for a conflict of interest, Kostyantyn Kryvopust

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The US Department of Justice opposed the hiring of FTX Sullivan & Cromwell, the law firm currently investigating the exchange, citing a potential conflict of interest.

In a recent judicial In a statement, the US Trustee said it objected to the FTX decision for two “primary” reasons. First, the law firm’s disclosures are insufficient to “assess whether S&C meets the Bankruptcy Code’s non-conflict and disinterestedness standards,” the Justice Department said.

Additionally, there may be a conflict of interest as Ryan Miller, General Counsel of FTX US, previously worked at S&C for eight years. The Justice Department said the investigation would put the law firm “in the conflicting position of investigating itself and its former partner.”

“Second, the scope of S&C’s withholding cannot be permitted as proposed,” the complaint added, clarifying that bankruptcy rules “specifically prohibit debtors in possession from conducting investigations.” The Justice Department asked the court to dismiss S&C’s application.

The Justice Department’s complaint comes just days after a bipartisan group of four United States senators, including John Hickenlooper, Tom Tillis, Elizabeth Warren and Cynthia Lummis, attacked S&C on much the same grounds.

Four senators wrote a letter to Judge John Dorsey of the U.S. Bankruptcy Court for the District of Delaware on Jan. 9, urging him to approve a proposal to appoint an independent examiner into FTX’s operations before its collapse in November. They wrote:

“We believe it is imperative that a strong, objective and disinterested expert be appointed in this case to conduct an investigative investigation into FTX, FTX US and their related entities to uncover the facts necessary to reassure FTX’s customers — and the public at large , – that justice be done and to inform Congress about future digital asset legislation.”

In early November, FTX and its group of crypto companies filed for Chapter 11 bankruptcy . Sam Bankman-Fried, the disgraced founder of FTX, later arrested in the Bahamas after the US Attorney formally filed criminal charges against him. He was eventually extradited to the United States, where he was released from prison after posting bail in in the amount of 250 million dollars in a New York court.

The Southern District of New York charged SBF with eight criminal counts, including fraud and conspiracy to misappropriate customer funds. Separately, the SEC accused SBF of “orchestrating a scheme to defraud investors in FTX.”

According to the latest updates, FTX has succeeded return more than 5 billion dollars cash and liquid assets that can be used to repay creditors. However, FTX’s counsel said it was still “not clear” how large the settlement fund would be for FTX’s creditors.

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