FTX’s Legal Counsel Is Dropped By SBF Due To Conflicts Of Interest

Sam Bankman-Fried (SBF), the CEO of FTX, was previously represented by Paul, Weiss, a law firm, but resigned the representation due to a conflict of interest. The choice to discontinue representation following SBF’s tweets was judged to obstruct the law firm’s efforts to reorganize.

Beginning on November 14, SBF posted a string of tweets that garnered a lot of attention on Crypto Twitter. The action, however, generated rumors that the cryptic tweets were sent in an effort to hide concurrently erased messages from bots. SBF’s “incessant and disruptive tweeting,” according to Paul, Weiss attorney Martin Flumenbaum, was detrimentally affecting the reorganization efforts even if no malice could be inferred:

“We informed Mr. Bankman-Fried several days ago, after the filing of the FTX bankruptcy, that conflicts have arisen that precluded us from representing him.”

The law firm’s choice to withdraw from assisting SBF came at the same time as Elizabeth Homes, a fellow fraudster, received her much anticipated prison sentence after being found guilty of criminal fraud.

SBF is currently under investigation for a number of reasons, including continuing inquiries into the misappropriation of customer cash and the publication of bankruptcy-related records.

The court may reject an attorney’s request despite telling the defendants and order them to continue representation, which may appear difficult given SBF’s behavioral issues brought up by the law firm.

Recently, Binance CEO Changpeng “CZ” Zhao opened up about the time when Binance was almost ready to bail out FTX from a collapse. Reflecting on the situation, he said:

“When he came to me, I knew he was desperate. If we can’t help him, there’s probably nobody else that would. Probably a bunch of people passed on the deal before us.”

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