The FTX saga takes a dramatic turn as the "Unabomber prosecutor," Robert J. Cleary, steps in to investigate potential conflicts of interest at law firm Sullivan and Cromwell (S&C). This move marks a significant shift in the case, raising serious questions about the firm's role in the FTX collapse.

Cleary's Mission: Unraveling the Tangled Web

Judge John Dorsey's green light for Cleary's investigation reverses an earlier decision and could be a game-changer. S&C, who raked in over $170 million for guiding FTX through bankruptcy, is now under scrutiny.

Investors have already filed a class-action lawsuit, accusing S&C of "racketeering activity" with FTX founder Sam Bankman-Fried. They allege that the firm, acting as FTX's advisor for two years, gained deep knowledge of the exchange's shaky foundation and questionable practices.

More damningly, the lawsuit claims S&C "vouched for FTX's solvency" right up until its demise, essentially misleading investors. The accusation goes further, suggesting S&C may have "agreed to assist" in FTX's misconduct for financial gain.

Beyond FTX: Implications for the Cryptoverse

Cleary's appointment comes after a federal appeals court intervened, citing the need for increased security in the crypto industry. The investigation could shed light on FTX's use of its own cryptocurrency (FTT) to inflate its value, potentially setting a precedent for future crypto ventures.

Calls for such an investigation have been mounting. Senators from both parties urged Dorsey to pursue "an objective investigation" in January 2023. Their concern? Legal counsel often plays a central role in financial scandals, and S&C's ability to impartially investigate their former client is questionable.

FTX Pushes Back, But Time is Ticking

Despite the growing pressure, current FTX CEO John Ray III opposes the investigation, claiming the company is now independent. However, the clock is ticking for S&C. Cleary has just sixty days to deliver a report detailing his findings on the FTX collapse.

With Bankman-Fried facing sentencing later this month, the investigation promises to unearth crucial details about the FTX debacle and potentially expose S&C's role in the crypto exchange's downfall.