Cryptocurrency exchange FTX paid a retainer of $12 million to New York law firm Sullivan & Cromwell LLP (S&C) before filing for Chapter 11 bankruptcy in November, according to a court filing dated December 21. The payment was made through West Realm Shires Services Inc. on behalf of FTX for legal services, and was intended to secure payment for S&C’s fees and expenses.
Over the past 90 days, FTX has paid an additional $3.5 million to S&C, bringing the total amount paid for legal services to at least $15.5 million. The filing also showed that S&C currently holds nearly $9 million of the $12 million retainer.
The bankruptcy filing and subsequent shutdown of FTX resulted in investors losing access to funds stored on the exchange. In an effort to regain investor confidence, some exchanges have turned to proof-of-reserve (POR) initiatives to provide evidence of the existence of users’ funds. However, Paxful CEO Ray Youssef has expressed support for the idea of Bitcoin being used as a store of value rather than a means of exchange.
District Judge Ronnie Abrams withdrew from the FTX case after disclosing that her husband, a partner at a law firm, had advised the exchange in 2021. Judge Abrams emphasized that her husband had no involvement in the case and sought to avoid any appearance of a conflict of interest by recusing herself from the action.