The Full Scoop: FTX bankruptcy proceedings, Covid Policy Errors & Trade Associations. (01-10 to 01-15)
In this week we will be looking at 3 separate sources for our macro recap.
FTX Bankruptcy. Millions of victims. A law firm leading the proceedings while also being at the heart of the organization that caused so much pain. Read on now!
Website: Wall Street On Parade
Title: FTX Bankruptcy Proceedings Thus Far Show a Shocking Miscarriage of Justice
Here are the top takeaways:
The FTX companies that the bankruptcy lawyers are attempting to resuscitate or sell off to other crypto outfits (while the law firms collect millions of dollars in billable hours for their work) are peddling a product that is created out of thin air and has no legitimate productive purpose.
Sullivan & Cromwell has bestowed on itself the role of lead law firm in the FTX bankruptcy. The main reason being billable hours. Sullivan & Cromwell has immersed itself in all things crypto. In a recent FTX bankruptcy court filing, Sullivan & Cromwell acknowledged that not only has it collected millions in legal fees from FTX & related companies. It is also simultaneously outside counsel to four of FTXs major competitors: BlockFi, Coinbase, Gemini, and Kraken.
Judge Dorsey releasing the names of the customers would allow the academic community and the press to conduct an analysis into the nature of traders that used FTX as well as its interrelationships with the megabanks and hedge funds on Wall Street.
A document filed with the bankruptcy court by Sullivan & Cromwell has indicated that megabanks JPMorgan Chase, Bank of America, Morgan Stanley and Wells Fargo had existing relationships with FTX and/or its affiliated companies.
The reality is that any real FTX customers (outside of the potential bots, algorithms and fake traders that might be doing the trading) are very angry customers. Their accounts at FTX have been frozen for more than two months with no ability to access their cash or securities.
New FTX management has testified that $8 billion of customers money is missing.
It seems just about every day there is a new breaking story about the opulent life that the alleged fraudsters were living with the looted funds from customer accounts.
It is highly unlikely that these defrauded customers are going to beat a path to the door of another crypto exchange or remain at that crypto firm if their account is sold and moved to another crypto firm.
The main issue with Sullivan & Cromwell is will the firms lawyers be able to effectively investigate their current and former partners who were central in FTXs 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.
In the FTX Group bankruptcy case, Sullivan & Cromwell is facing allegations of conflicts of interest and failing to disclose important information. Despite these concerns, the firm has been allowed to continue running the bankruptcy proceedings.
This raises questions about whether all of the actions taken by Sullivan & Cromwell will have to be undone if the court finds that the firm was not qualified to handle the bankruptcy.
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