Category Archives: Uncategorized

By Pam Martens and Russ Martens: February 1, 2023 ~ Five pages of a deeply sensitive document that is both embarrassing and potentially a legal threat to people in positions of power vanished yesterday from public viewing in the criminal case against former crypto-kingpin Sam Bankman-Fried. The document is a letter written by five federal prosecutors in the U.S. Attorney’s Office for the Southern District of New York. The courthouse where the five pages vanished from view is where the case is being heard: the U.S. District Court for the Southern District of New York. According to personnel in the Press Office and Records Management Office of that District Court that we spoke to yesterday, all six pages of the document had been filed electronically on Monday, January 30, and all six pages of the document were able to be viewed in the court’s ECF system (Electronic Case Files) according to … Continue reading →

By Pam Martens and Russ Martens: January 31, 2023 ~ The 144-year old law firm, Sullivan & Cromwell, which previously prided itself on being the go-to law firm for Wall Street, decided a few years back to get deep in the swamp with all things crypto. That dicey decision is now playing out in negative headlines that are dragging down the reputation of the 900-attorney law firm. Adding to questions swirling around its past legal representation of now indicted crypto kingpin, Sam Bankman-Fried, as well as his bankrupt crypto exchange, FTX, and his hedge fund, Alameda Research, is the fact that a growing number of Sullivan & Cromwell’s other crypto clients are also in various stages of distress. Notwithstanding that reality, the presiding judge in the FTX bankruptcy proceedings, John Dorsey, signed an order on January 20 naming Sullivan & Cromwell the lead counsel in the FTX bankruptcy case. But long … Continue reading →

By Pam Martens and Russ Martens: January 30, 2023 ~ According to a Yale School of Management study, in 2013 JPMorgan Chase had 1,339 hedge fund clients. As of July of last year, that number had soared to 4,281 according to the annual Convergence Inc. study. While Goldman Sachs and Morgan Stanley topped the total number of hedge fund clients (with 5,150 and 4,964, respectively) JPMorgan Chase ranked number one in terms of hedge fund Assets Under Advisement (AUA). (See Convergence Inc. study linked above.) There’s a big problem here that federal bank regulators are choosing to ignore at the peril of the U.S. financial system. JPMorgan Chase, unlike Goldman Sachs and Morgan Stanley, is the largest federally insured, taxpayer backstopped, depository bank in the United States with more than $2.47 trillion in deposits as of June 30, 2022. Unfortunately, as a result of the repeal of the Glass-Steagall Act in … Continue reading →

By Pam Martens and Russ Martens: January 27, 2023 ~ A battle between Big Law firm Sullivan & Cromwell and the U.S. Trustee (who represents the U.S. Department of Justice in the bankruptcy proceedings) is heating up for a hearing scheduled for February 6. The hearing will take arguments for and against why Sullivan & Cromwell should not be allowed to investigate its own past conduct in the serial frauds that prosecutors have alleged occurred at Sam Bankman-Fried’s crypto companies. Since the FTX bankruptcy filing on November 11, Sullivan & Cromwell has been functioning as lead counsel for the bankruptcy estate and was officially appointed to that position by the court on January 20, despite what looks like fatal conflicts to a growing number of observers. Both Sullivan & Cromwell and the U.S. Trustee have filed interrogatories to take discovery from each other prior to the hearing, according to court documents. … Continue reading →

By Pam Martens and Russ Martens: January 26, 2023 ~ We don’t know what kind of legal kryptonite the University of California, Berkeley, School of Law is bestowing on its graduates but one young alumnus appears to be fearless about whom he takes on. Marshal Hoda, the young attorney from a one-man office in Houston, who is representing two customers of the collapsed FTX crypto exchange, tested out his super powers in a January 20 hearing in the U.S. Bankruptcy Court in Delaware. Hoda is pitched against the 900-attorney Big Law firm of Sullivan & Cromwell in one of the most closely-watched (and bizarrely conflicted) bankruptcy cases in U.S. history. Co-counsel with Hoda for the two customers are John D. McLaughlin, Jr. of Ferry Joseph, P.A. and Patrick Yarborough of Foster Yarborough, PLLC. During the hearing, Hoda admonished Sullivan & Cromwell with this: “When you find yourself in a hole, stop … Continue reading →

By Pam Martens and Russ Martens: January 25, 2023 ~ Yesterday, the federal watchdog agency – the Consumer Financial Protection Bureau (CFPB) – announced that it wants to hear directly from the public on credit card practices. But since “the public” also includes all of the folks that are paid to carry water for the credit card industry, the voice of the average Joe and Jane is highly likely to be overwhelmed by industry sycophants, as is typically the case. Thus, we are asking our readers to give this matter some careful thought, as we outline below, and if you are so inclined, send your comments to the good folks at the CFPB using this link they have set up. The public has until April 24, 2023 to submit comments but we ask that you do so promptly. Topic 1: The Same Banks that Were Bailed Out by the U.S. Taxpayers in … Continue reading →

By Pam Martens and Russ Martens: January 24, 2023 ~ On January 31 of last year, Oliver Sullivan reported at Lawyer Monthly that the growing list of countries “that wholly banned cryptocurrencies includes China, Egypt, Iraq, Qatar, Oman, Morocco, Algeria, Tunisia, Bangladesh and (as of this month) Kosovo. Forty-two others have passed restrictions to this effect, prohibiting crypto exchanges or limiting the ability of banks to engage with crypto.” Compare that to the United States, which increasingly looks like a financial backwater, with questionable crypto deposits blowing up federally-insured banks; collapsing publicly-listed crypto mining stocks whose business model is to pump more fossil fuels into the atmosphere in order to solve complex mathematical problems that have no productive purpose; $8 billion in customer funds going missing at the FTX crypto exchange which was promoted by media darlings on television; and, of course, Big Law firms getting fat at the crypto bankruptcy … Continue reading →

By Pam Martens and Russ Martens: January 23, 2023 ~ Customers of bankrupt crypto platforms who have been locked out of withdrawing from their accounts for months, are learning the hard way that U.S. bankruptcy court judges in New York and Delaware have little sympathy for their plight. Instead, there has been an uncanny propensity to side with big corporate law firms like Kirkland & Ellis and Sullivan & Cromwell. A December 11, 2019 report from the Congressional Research Service cited a study that found that “60% of large business debtors filed for bankruptcy” in just two venues – the U.S. Bankruptcy Court for the District of Delaware and the Southern District of New York – despite the fact that the businesses did not maintain their principal place of business there. The report further notes that “when debtors have substantial flexibility to choose the jurisdiction in which they file for bankruptcy, … Continue reading →

By Pam Martens and Russ Martens: January 19, 2023 ~ Daniel Friedberg, a former attorney at the collapsed crypto exchange, FTX, has filed a heart-stopping declaration today with the U.S. bankruptcy court in Delaware. He is effectively accusing one of the oldest law firms in America, Sullivan & Cromwell (S&C), of engaging in a fraudulent scheme in the FTX bankruptcy case. Friedberg further alleges that this fraudulent conspiracy was helped from the inside of FTX by S&C’s former law partner, Ryne Miller. According to new management at FTX, at least $8 billion of customer funds are missing, with the bulk of the money illegally diverted for use by Alameda Research, a hedge fund owned by the former co-founder and CEO of FTX, Sam Bankman-Fried, who has pleaded not-guilty to 8 criminal felony counts brought by the U.S. Department of Justice. Two of his top lieutenants, Caroline Ellison and Gary Wang, have … Continue reading →

By Pam Martens and Russ Martens: January 19, 2023 ~ On Tuesday, Jerome Powell’s Federal Reserve once again thumbed its nose at President Biden’s antitrust directive regarding the creation of more mega banks through merger. This time around, the Fed allowed the Bank of Montreal, with assets of $834 billion, and its subsidiary, BMO Financial, to gobble up Bank of the West, based in San Francisco. Following the merger, Bank of the West is to be merged into Bank of Montreal’s subsidiary bank, BMO Harris Bank. On Friday, July 9, 2021, President Biden released a sweeping Executive Order that warned federal bank regulators against actions that create “excessive market concentration” with specific mention of bank merger activity. One business day later, the Federal Reserve announced that it had approved another bank merger. According to the Fed’s own data, since January 1, 2006, it has approved 4,506 bank mergers, while denying one application. (See … Continue reading →