Good morning. Sam Bankman-Fried said cryptocurrency exchange FTX had a closer relationship than previously disclosed with its bankruptcy law firm Sullivan & Cromwell LLP, adding to questions about the law firm’s work for past FTX management, reports Risk & Compliance Journal's Mengqi Sun.

The founder and former chief executive of FTX, back online and in a new blog post that could suggest elements of his upcoming legal defense, said Sullivan & Cromwell was one of the main forces pushing him to resign and for the exchange to file for bankruptcy. Mr. Bankman-Fried is currently under house arrest at his parents’ California home as he faces federal fraud charges. He pleaded not guilty on Jan. 3.

Sullivan & Cromwell was one of two primary law firms FTX International used before the bankruptcy and it was FTX U.S.’s main law firm, Mr. Bankman-Fried wrote in a post Thursday on Substack, an online subscription-based newsletter platform.

Mr. Bankman-Fried said the law firm helped FTX and its U.S. units on some of their most important regulatory applications and concerns, as well as important transactions, and that he sometimes worked out of Sullivan & Cromwell’s office in New York when he visited the city.

Law firms seeking to work on chapter 11 cases are required under bankruptcy rules to disclose any past representations that could pose a conflict of interest before they can be officially retained.

Note to readers: The Morning Risk Report will not publish on Monday in observance of Martin Luther King Jr. Day.

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Crypto firms Genesis, Gemini face regulatory action. The Securities and Exchange Commission on Thursday sued Genesis Global Capital LLC and Gemini Trust Company LLC over a $900 million crypto-lending program that allegedly violated investor-protection laws.

The SEC filed its civil lawsuit in Manhattan federal court alleging that Genesis should have registered the product, which would have required providing clients with detailed financial disclosures. The companies began marketing the program to individual investors in February 2021 and raised billions of dollars’ worth of crypto assets from hundreds of thousands of investors, the SEC said.

The SEC’s lawsuit seeks fines and the return of profits that were illegally earned.

Ericsson sets aside $220 million for potential settlement. The Stockholm-based telecommunications company said Thursday that it booked a 2.3 billion Swedish kronor ($219.7 million) provision in the fourth quarter of 2022 ahead of a potential resolution to an alleged deal breach with the U.S. Justice Department.

Ericsson entered a deferred prosecution agreement with the DOJ in 2019 to resolve a past probe into alleged corruption in China, Vietnam and Djibouti, with any breach of the deal potentially opening the Swedish telecommunications-equipment company to prosecution.

Following the deal, the DOJ claimed the company later failed to make adequate disclosures over the discovery of suspicious payments in Iraq ahead of entering the deferred prosecution agreement.

•  A federal labor official has upheld the unionization of Amazon.com Inc. workers in Staten Island, N.Y., rejecting an appeal by the e-commerce giant, which tried to challenge last year’s vote to organize.
   
• Senior House Republicans introduced legislation Thursday to ban federal employees from pressuring internet platforms to suppress lawful speech. The bill would bar federal employees from ordering or advocating for “the removal or suppression of lawful speech” from internet platforms.

Asia, Europe look to restrain China. Democracies in Asia that rely on the backstop of U.S. military power for their prosperity are confronting a new reality: American protection is no longer enough now that China rivals the U.S. in areas such as advanced missiles and naval hardware.

To tackle the problem, Beijing’s neighbors, with prodding from the U.S. and help from Europe, are building a network of regional securities ties with a goal similar to that of the North Atlantic Treaty Organization: deterring a large nation whose growing ambitions have raised the prospect of conflict.

On a related note, Risk & Compliance Journal's Richard Vanderford spoke with WSJ's What's News podcast about risk experts' forecasts that businesses could face another year of geopolitical upheaval.

Hot water. The world’s oceans absorbed record amounts of heat from the atmosphere last year, which slowed the rise of temperatures over land, while fueling powerful storms and weather systems that are damaging communities across the globe, federal climate scientists said.

The amount of heat energy contained in the top layer of the world’s oceans has been growing each year since 2019 and is now at record levels, according to a report by the National Oceanic and Atmospheric Administration released Thursday. 

Also on Thursday, the United Arab Emirates named the chief executive of its national oil company as the president of this year’s United Nations climate summit, drawing criticism from environmental activists. And a climate startup announced an industry first, saying it had it pulled carbon dioxide from the open air and stored it underground.

• A month after scrapping most of its zero-Covid restrictions, China is experiencing all at once what many other nations have been navigating for three years. Infections have skyrocketed, medical facilities are stretched to their limits and the elderly and infirm are dying.
   
• U.S. inflation eased in December for the sixth straight month. The improving inflation data are likely to keep the Fed on track to reduce the size of interest-rate increases to a quarter-percentage-point.
   
• Top executives in much of the world are preparing for an economic downturn that is shorter and milder than usual, so they are focused on weathering the slowdown without widespread job cuts, a new survey found.
   
• South Korean President Yoon Suk-yeol said the country could develop its own nuclear weapons or ask the U.S. to redeploy them on the Korean Peninsula if the threat from North Korea grows, in the first time a leader of the country has explicitly raised the prospect in decades.
   
• In just over a year, the U.S. has passed three huge budget measures aimed at transforming its domestic economy. There is a crucial consideration: How these three policies are implemented in the months ahead could reshape global trade relations for years to come.
   
• Several people have been killed in Alabama and Georgia as severe storms and tornadoes destroyed homes and uprooted trees across the Southeast U.S.
   
• Russia’s Defense Ministry said Moscow’s forces had completed the capture of Soledar overnight, as Ukrainian officials said battles were continuing for control of the eastern town.

Volkswagen endures supply-chain woes. The company reported its lowest sales in more than a decade but said it was confident business would improve this year as supply-chain blockages ease and semiconductors become more easily available.

VW, which also includes passenger-car brands Skoda and Seat, luxury-car maker Audi, and sports-car maker Porsche AG, said Thursday that global sales dropped 7% to 8.3 million vehicles, as supply-chain constraints shut down some factories in Europe in the wake of Russia’s invasion of Ukraine and Covid-19 measures in China.

• Southwest Airlines Co. has hired an outside consulting firm and is working to strengthen a crew scheduling system after a meltdown roiled its operations during the holidays, Chief Executive Bob Jordan said in an interview.
   
• Thousands of New York City nurses who went on strike this week returned to work Thursday after reaching tentative deals with their hospitals. The agreements ended a three-day strike held by more than 7,000 nurses.