FTX's Bankman Fried's First Defense: Blame Sullivan & Cromwell

Sam Bankman-Fried, in First Detailed Defense, Seeks to Dismiss Charges

Sam Bankman-Fried, the founder of the collapsed cryptocurrency exchange FTX, has issued his first detailed legal defense since prosecutors accused him of fraud, seeking to dismiss several of the charges and claiming that the high-powered law firm representing FTX in its bankruptcy has been doing the government’s bidding.

In court filings late Monday, lawyers for Mr. Bankman-Fried said FTX and its lawyers at the firm Sullivan & Cromwell had become de facto agents of federal prosecutors building the criminal case against him and might be withholding crucial evidence.

“FTX’s legal advisors went to the government to accuse Mr. Bankman-Fried behind his back without knowing the full facts, and ultimately forced him to step down as C.E.O.,” the lawyers wrote.

JPMorgan Ordered to Pay Charlie Javice’s Legal Fees in Frank Fraud Case

Delaware Chancery Court Judge Kathaleen St. J. McCormick concluded Monday that JPMorgan was legally obligated to cover Javice’s legal bills, rejecting the bank’s argument that her alleged fraud fell outside the scope of the 2021 merger agreement. The ruling likely also covers Javice’s legal fees tied to criminal fraud charges brought by federal prosecutors over the disputed deal.

JPMorgan sued Javice and Olivier Amar, another Frank executive, for fraud in Delaware federal court in December, claiming they falsified records to show the site had more than four million customers when it actually had less than a tenth that number. JPMorgan has since shut down the Frank site.

Javice and Amar both turned around and sued JPMorgan for legal fees in Delaware Chancery Court, saying the deserved coverage under the bank’s policies since they became JPMorgan employees after the buyout. The bank’s attorneys countered the fraud allegations negated the institution’s indemnity obligations.

Ex-Coinbase Lawyers Get Gigs After Crypto-Related Layoffs, Exits

Coinbase Global Inc.’s former lawyers are landing key legal posts after the biggest US digital-asset trading platform cut staff and prepared for a possible lawsuit from regulators.

Richard “Rick” Estacio, who was on paternity leave when he was among two dozen legal and compliance staffers laid off at Coinbase, said he joined Reddit Inc. on Monday. He’s among “good people previously with Coinbase legal landing in great spots,” he said in an email.

Sumeet Chugani, a former associate general counsel for product at Coinbase, as of May 1 became legal and compliance chief for Cloaked Inc., a privacy app, he said in an email. Hector Ivan Velez, Coinbase’s former associate general counsel for capital markets, has joined Flow Carbon Inc., a carbon-credit cryptocurrency startup backed by WeWork Inc. co-founder Adam Neumann, Velez said in a LinkedIn post last week.

Ripple will have spent $200 million fighting SEC lawsuit, CEO says

Ripple will have spent $200 million defending itself against a lawsuit from the U.S. Securities and Exchange Commission by the time it is over, CEO Brad Garlinghouse told CNBC Monday.

“With the SEC, we will spend — this is the first time I’ve shared this publicly — by the time all’s said and done, we will have spent $200 million defending ourselves against a lawsuit, which from its very beginning, people were like, well, this doesn’t make a lot of sense,” Garlinghouse said during a fireside chat with CNBC’s Dan Murphy at the Dubai Fintech Summit.

The SEC Awakens to Cybersecurity With the Zeal of a Convert

After a quarter-century of relative cyber slumber—a period of guidance and enforcement action, certainty, but no rule-making—the SEC is approaching information security with a convert’s zeal. In a January 2022 speech, SEC Chair Gary Gensler referenced remarks made by the director of the Cybersecurity and Infrastructure Security Agency (CISA), Jen Easterly, who had observed that “cybersecurity is a team sport.” Chair Gensler, a veteran regulator who gave teeth to the Commodity Futures Trading Commission (CFTC) as its chairman, noted that while both CISA and the FBI “captain Team Cyber,” the SEC has “a role to play as well.” The SEC has since taken that role seriously and, over the course of a year, issued approximately 1,500 pages of proposed rules and amendments related to cybersecurity.

Shaq Is Anything But Easy Target in FTX Suit Even at 7 Feet Tall

Shaquille O’Neal is calling foul on the lawyers who chased him for months to serve a lawsuit accusing the basketball legend of duping investors in FTX crypto exchange.

Chucking legal documents at the front of O’Neal’s car as he drove quickly through the gates of his Georgia home doesn’t count as properly serving a lawsuit, his attorneys say.

The Supreme Court Case That Could Threaten the SEC’s Climate-Disclosure Rule

The high court last week said it would reconsider Chevron v. Natural Resources Defense Council, a 1984 Supreme Court opinion that gives regulators legal cover to interpret ambiguous—and sometimes outdated—statutes.

The court’s conservative majority appears poised to overturn or narrow Chevron, a move that would weaken the Biden administration’s ability to defend its regulatory agenda, including a rule requiring public companies to disclose information about carbon emissions and climate risks.

Supreme Court decision could see SEC facing logjams in enforcement cases

The Supreme Court’s unanimous decision on April 14 granting companies and people facing SEC charges the ability to challenge the agency’s constitutional authority in U.S. District Court before the SEC resolves the matter in-house could cause “headaches” for at least some of the SEC’s enforcement efforts, said Christian D. H. Schultz, a Washington-based partner at Arnold & Porter Kaye Scholer LLP and former assistant chief litigation counsel in the SEC’s enforcement division. ”

There will be many cases that the commission may want to bring in an administrative proceeding where the defendant could say, ‘Well I should have this heard by a jury, not some in-house judge,’ which creates a constitutional issue for a federal court to resolve and that jams up the SEC from doing anything in that administrative proceeding,” Mr. Schultz said.

“The whole administrative proceeding process really has the potential to get jammed up significantly.”

ESG M&A

Environmental, social and governance investing is not quite like that: ESG criteria tend to be imposed by shareholders, so a company that pursues ESG goals is giving (many of) its shareholders what they want. Still, to the extent there are trade-offs between financial returns and ESG criteria, the directors and executives, rather than the shareholders, will often in practice be the people making those trade-offs. “We decided to abandon a profitable project we didn’t like because it was bad ESG,” the board will say, or “we decided not to abandon a polluting project that we did like because it was good for profits.” Shareholders can of course push back — ESG-focused shareholders can say “no, abandon that polluting project, it’s bad for ESG,” or non-ESG-focused shareholders can say “no, keep the polluting project because it’s profitable” — but the board (1) gets to decide and (2) can always point to some shareholder-friendly rationale for whatever decision it makes.

What this means is that, in hostile M&A, a board can now reject an offer not only on the grounds that it is too low, but also on the grounds that it not ESG enough….