A former chief lawyer for FTX has accused the company’s U.S. general counsel of channeling business to Sullivan & Cromwell (S&C), the firm currently serving FTX as bankruptcy counsel.

Daniel Friedberg, who was the chief regulatory officer of FTX until he resigned on Nov. 8, made the allegations as part of a Jan 19. court filing.

In the declaration, Friedberg alleges that FTX US lead counsel Ryne Miller, who is a former partner at S&C, channeled business towards his former law firm across numerous cases. Friedberg stated:

“Mr. Miller informed me that it was very important for him personally to channel a lot of business to S&C as he wanted to return there as a partner after his stint at the Debtors.”

Lawyer and former chief of the Securities and Exchange Commission Office of Internet Enforcement, John Reed Stark, highlighted the magnitude of the allegation in a Jan. 20 tweet. 

Friedberg claims in the filing that he reminded Miller that his “allegiance” was to the debtor and not to S&C, but this issue “continued to be a problem throughout his work” at FTX.

Friedberg alleged that after Miller’s hiring in early 2020, Miller asked whether he could hire his former law firm, to which Friedberg replied by saying it was Miller job “to only hire the best outside counsel for the job.”

Miller ended up engaging S&C to be primary counsel for FTX US, FTX Derivatives (formerly LedgerX), and Sam Bankman-Fried’s holding company Emergent, Friedberg wrote.

Friedberg also accused Miller of having earmarked $200 million of LedgerX funds for S&C to pay its legal fees, saying: “there was over $200 million cash in LedgerX and that he was going to send these funds to S&C, and that bankruptcy legal costs were therefore not a problem.”

Decision incoming

While the filing is simply a declaration in support of an FTX creditors objection to the retention of FTX lawyers Sullivan & Cromwell LLP, it makes a number of accusations that were previously undisclosed.

Friedberg apologized for filing his declaration at the last moment, saying that he had no time due to the filing of the Dietderich Supplemental Declaration. Andrew Dietderich is a partner at S&C who filed the declaration in support of FTX’s motion to retain S&C as their lead counsel.

Related: FTX CEO says he is exploring rebooting the exchange: Report

Friedberg finishes his declaration by affirming that he would “testify competently to the facts set out in this Declaration” if called upon to testify.

A hearing is scheduled to occur at the bankruptcy court on Jan. 20, where the judge will hear from various parties involved before deciding whether FTX will be able to retain S&C as its lead counsel. 

Cointelegraph has reached out to FTX for comment.