FTX Refunds $12M Pre-Bankruptcy Guarantee

Crypto ExchangeFTXceased to exist after its sister company Alameda Research was criminallytook possession of FTX users' funds. FTX, along with 130 other affiliates, has begun voluntary Chapter 11 proceedings under the U.S. Bankruptcy Code.According to the U.S. District Court decision, the debtors paid $12 million as a security deposit to the New York-based law firm Sullivan & Cromwell LLP (S&C).

This amount is paid as an advance to resolve honorarium and expense issues.In addition, the court ruled that S&C would retain the unused balance as a standing advance for the duration of the case until the end of Chapter 11 was reimbursed.

District Judge Ronnie Abrams excused herself fromparticipation in the FTX proceeding because the law firm of Davis Polk & Wardwell LLP, of which her husband is a partner, advised FTX in 2021. She also emphasized that the said law firm advised other representing parties that may not benefit defendant Samuel Bankman-Friend (SBF).

She further confirmed that her husband does not havenothing to do with any of these representations. She then stated that these matters were confidential and unknown to the court. Abrams concluded by saying that the court summoned the defendants to the next hearing on January 11, 2023, while extending the objection deadline only until January 4, 2023.