FTX investors have decided to back down from their legal battle against Sullivan & Cromwell.
The group, which had previously accused the law firm of playing a part in the multi-billion-dollar fraud linked to FTX, officially informed a federal court in Miami on Wednesday that they were withdrawing their proposed class action lawsuit.
Bankruptcy examinerās report clears Sullivan & Cromwell
The lawsuit, which had been launched against Sullivan & Cromwell, accused the firm of having deep involvement with FTXās shady operations before the exchangeās collapse.
Sullivan & Cromwell had represented FTX in around 20 legal cases before the companyās dramatic downfall.
The change in the case largely came from findings shared by FTX bankruptcy examiner Robert Cleary.Ā
According to Adam Moskowitz, the lead counsel for the FTX investors, Clearyās investigations, which were published in reports from May and September, didnāt reveal any wrongdoing by Sullivan & Cromwell.Ā
They instead showed that the law firm didnāt engage in or ignore any suspicious activities when it worked with FTX or its founder, Sam Bankman-Fried.
Moskowitz told Reuters that āno claims at this stageā could be pursued. After that, the investors realized there was no point in continuing their legal fight.
Sullivan & Cromwell was quick to issue a statement following the withdrawal of the lawsuit, calling the claims āmeritless.ā
FTXās bankruptcy plan and repayment strategy
FTX declared bankruptcy in November 2022, after billions of dollars in customer deposits vanished from its accounts.
U.S. Bankruptcy Judge John Dorsey, who is overseeing the case in Wilmington, Delaware, approved FTXās bankruptcy plan at a court hearing last week.
He praised the plan as a model for dealing with a complex bankruptcy case like FTXās, which has been anything but straightforward.
The plan outlines many settlements, including agreements with FTX customers, creditors, U.S. government agencies, and liquidators.
According to the plan, FTXās top priority is repaying its customers, specifically those who held $50,000 or less on the platform.
These customers are expected to receive their funds within 60 days of the planās effective date, though the exact date has not yet been determined, but it reportedly covers 98% of customers.
FTX estimates that it will have between $14.7 billion and $16.5 billion available. It is expected to cover at least 118% of the value in customer accounts.
FTX and its new leadership, including CEO John Ray, have emphasized that this recovery was only possible because of the hard work of the team handling the bankruptcy.
According to Ray, the team worked tirelessly to rebuild FTXās financial records from scratch and tracked down assets that had gone missing when the company collapsed.
