Sullivan & Cromwell, the prestigious law firm handling the bankruptcy of FTX, found itself scrambling this week to fully disclose its previous legal work for the collapsed cryptocurrency exchange, as critics accused it of a conflict of interest.

The big law firm had drawn fire from four U.S. senators, two FTX creditors and even the U.S. trustee appointed to oversee the case, who argued that the firm’s initial disclosures, filed in December, were incomplete. Some of the critics also complained that Sullivan & Cromwell was conflicted because it had handled some regulatory matters for FTX before the company’s Nov. 11 bankruptcy filing, and advised it on acquisitions of other crypto companies.

But at a hearing on Friday in Delaware bankruptcy court, Sullivan & Cromwell got a reprieve on the disclosure issue after it responded to a Jan. 13 motion from the trustee calling for more information. And after a hearing on the potential conflict claims raised by two FTX creditors, Judge John T. Dorsey of U.S. Bankruptcy Court said he would approve the firm as FTX’s bankruptcy counsel.

Judge Dorsey said “potential conflicts” do not disqualify a law firm from representing a company in bankruptcy court.

Still, the episode was an embarrassing moment for one of the oldest law firms in New York, a longtime adviser on some of the biggest corporate mergers and major regulatory investigations involving businesses.

In its initial disclosure in December, after being hired to handle...

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