US Law Firm Apologizes For AI Hallucinations in Filing | Crypto ETF News
Crypto ETF news: US Law Firm Apologizes For AI Hallucinations in Filing. This update explains what changed, why it matters for institutional adoption, market flows, and investor sentiment, and what the crypto market should watch next.
Institutional And ETF Update
Sullivan & Cromwell’s Andrew Dietderich said the company has AI policies to prevent incorrect citations and other errors, but procedures weren’t followed on this occasion.Wall Street law firm Sullivan & Cromwell has apologized to a federal judge after submitting a court filing that contained around 40 incorrect citations and other errors caused by AI hallucinations.“We deeply regret that this has occurred,” Andrew Dietderich, co-head of Sullivan & Cromwell’s global restructuring team, wrote Friday in a letter to Chief Judge Martin Glenn of the US Bankruptcy Court for the Southern District of New York.“The Firm and I are keenly aware of our responsibility to ensure the accuracy of all submissions including under Local Bankruptcy Rule 9011-1(d), and I take responsibility for the failure to do so,” he said of an emergency motion filed nine days earlier.Excerpt from Andrew Dietderich’s letter to Chief Judge Martin Glenn. Source: Sullivan & CromwellThe incident highlights the risk AI tools can pose in high-stakes professional work without proper oversight. A database managed by legal technologist Damien Charlotin has recorded 1,334 incidents of AI hallucinations in court filings around the world, including more than 900 in the US.Charlotin pointed out that most of these hallucinations involve fabricated citations, though AI-generated legal arguments have also occasionally been identified.Dietderich said Sullivan & Cromwell has policies in place for the use of AI tools, which include a review of the citations it uses, but said the policies weren’t followed.“Regrettably, this review process did not identify the inaccurate citations generated by AI, nor did it identify other errors that appear to have resulted in whole or in part from manual error.”Sullivan & Cromwell is one of the largest law firms in the US by revenue, ranking 30th on the AmLaw Global 200. The firm also represented crypto exchange FTX in its bankruptcy case.Sullivan & Cromwell is conducting an internal investigationDietderich said the law firm took “immediate remedial measures,” including a full review of the circumstances that led to the errors. Related: Coinbase’s AI payments protocol x402 launches app store for AI agentsThe firm is also “evaluating whether further enhancements to its internal training and review processes are warranted,” Dietderich said.Dietderich also noted that the errors were spotted by a rival law firm.“I also called Boies Schiller Flexner LLP on Friday to thank them for bringing this matter to our attention and to apologize directly to them as well,” he said. Magazine: IronClaw rivals OpenClaw, Olas launches bots for Polymarket — AI EyeCointelegraph is committed to independent, transparent journalism. This news article is produced in accordance with Cointelegraph’s Editorial Policy and aims to provide accurate and timely information. Readers are encouraged to verify information independently. Read our Editorial Policy https://cointelegraph.com/editorial-policy
Why This ETF News Matters
First, this development may affect institutional demand, exchange flows, market liquidity, and broader investor confidence. In addition, it may influence custody trends, fund positioning, and future crypto product approvals. As a result, traders and investors should watch the next moves closely.
What To Watch Next
Watch for filing updates, approval decisions, inflow and outflow data, custody changes, and asset manager commentary. In particular, any new developments involving BlackRock, Grayscale, Fidelity, or major spot ETF products could directly affect the broader crypto market.
