An independent investigation into Sullivan & Cromwell LLP, the law firm that oversaw the FTX bankruptcy, found that the firm was unaware of the dire financial conditions and underlying fraud that led to the collapse of the once-thriving exchange.

Former United States prosecutor Robert Cleary conducted the investigation and noted that while attorneys at Sullivan & Cromwell did make false statements while representing FTX, they did so without knowing the statements were false.

After the findings of the investigation were made public, Sullivan & Cromwell released the following statement:

“Sullivan & Cromwell remains confident in our pre-petition work for FTX and the commencement of the Chapter 11 cases, and we welcome the examiner’s findings to date rejecting various baseless allegations about our work for FTX.”

The investigation was ordered after FTX creditors and clients seeking recourse voiced widespread suspicion and condemnation of Sullivan & Cromwell.

When initially chosen to oversee the bankruptcy proceedings, the law firm faced blowback from concerned creditors and former customers of the platform alike, who thought that the law firm’s pre-bankruptcy work with FTX compromised the integrity and objectivity of the legal powerhouse.

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On Nov. 17, 2022, FTX filed for Chapter 11 Bankruptcy following a series of troubling developments that culminated in the exchange’s total collapse.

One week before the now-infamous collapse, Binance sought to acquire FTX and initiated a non-binding agreement to buy out the exchange and take over its day-to-day operations.

The market reacted to news of the acquisition negatively, and the FTX Token (FTT) plummeted in value from roughly $22 to $5.50 in a single day of trading.

A mere 24 hours later, Binance canceled the tentative deal, citing concerns with FTX’s financial position, comingling of customer funds and reports of preliminary investigations from U.S. authorities into the widely used exchange.

The cancellation of the deal further exacerbated FTX’s collapse, inflaming already widespread fears that something was not quite right at the company.

Several days after Binance proposed and subsequently retracted the deal, media reports began to emerge that roughly $1 billion in customer assets were missing from FTX. This prompted more runs on the exchange as customers desperately tried to pull their money out of the collapsing platform.