amended filing<\/a> in court on Aug. 11, claiming that evidence from Sam Bankman-Fried\u2019s criminal trial and FTX\u2019s bankruptcy proceedings shows Fenwick was deeply involved \u201cin the most important aspects of why and how the FTX fraud was accomplished.\u201d<\/p>\nThey argued that the exchange\u2019s failure was not only the result of internal misconduct but also the legal structures created and approved by Fenwick.<\/p>\n
What does the amended lawsuit allege?<\/h2>\n
Fenwick provided \u201csubstantial assistance\u201d to FTX by designing and endorsing corporate arrangements that allowed billions of dollars in customer funds to be diverted, the group said in its proposed filing.<\/p>\n
They accused the firm of representing \u201cconflicted companies\u201d FTX-related entities, such as trading firm Alameda Research, and its subsidiary North Dimension, that \u201cpurposefully had no safeguards\u201d to prevent misuse of assets, which the group argues was a central factor in the FTX fallout.<\/p>\n
Plaintiffs say former FTX executives, Nishad Singh, Gary Wang, and Caroline Ellison, testified that Fenwick knew about improper loans, false statements, and the misuse of customer funds, and even advised on ways to hide it.<\/p>\n
<\/p>\n
Singh allegedly told the court that he informed Fenwick of these actions and, in turn, \u201cFenwick advised on how to facilitate and hide these very acts,\u201d the filing noted.<\/p>\n
Findings from an independent examiner in the FTX bankruptcy are also included in the filing.<\/p>\n
The examiner, after reviewing more than 200,000 documents \u2014 many involving Fenwick \u2014 reportedly concluded that the law firm had \u201cexceptionally close relationships\u201d with FTX leadership and was \u201cdeeply intertwined\u201d in most aspects of its wrongdoing and accused Fenwick of creating shell entities to mask asset transfers and of setting up auto-deleting Signal chats used by FTX executives.<\/p>\n
Plaintiffs also accused the law firm of implementing \u201cother concealment practices that regulators and prosecutors later cited as obstruction\u201d and of knowing these actions \u201cwould mislead investors and regulators.\u201d<\/p>\n
The filing introduces two new claims under Florida and California securities laws over Fenwick\u2019s alleged role in FTX Token sales.<\/p>\n
\u201cFenwick, through its attorneys and under its direction, played an active role in designing, promoting, and facilitating the sale of unregistered securities in the form of YBAs, FTT tokens, and interests in other FTX-controlled instruments to Florida residents,\u201d an excerpt from the filing reads.<\/p>\n
Fenwick & West in earlier proceedings<\/h2>\n
Fenwick\u2019s ties to FTX have surfaced on multiple occasions during Bankman-Fried\u2019s trial in late 2023. The former CEO has testified that the firm, alongside FTX\u2019s in-house counsel, handled critical legal work such as payment agent agreements for Alameda\u2019s North Dimension bank accounts \u2014 through which FTX customer deposits were routed.\u00a0<\/p>\n
Bankman-Fried told the court that Fenwick lawyers knew FTX insiders were using encrypted chats with auto-delete, and said he leaned heavily on their legal advice and that of other counsel.<\/p>\n
Fenwick, in a September 2023 motion to dismiss, argued<\/a> it couldn\u2019t be blamed for a client\u2019s actions when its work fell within the limits of representation, and denied every claim in the group\u2019s original filing.<\/p>\n <\/p><\/div>\n","protected":false},"excerpt":{"rendered":"
Disgruntled customers of the now-defunct crypto exchange FTX have proposed amending their lawsuit against Fenwick & West, the exchange\u2019s former legal adviser, citing new evidence that the firm played a…<\/p>\n","protected":false},"author":1,"featured_media":7518,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-7517","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-cryptocurrency"],"_links":{"self":[{"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/posts\/7517","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/comments?post=7517"}],"version-history":[{"count":1,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/posts\/7517\/revisions"}],"predecessor-version":[{"id":7519,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/posts\/7517\/revisions\/7519"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/media\/7518"}],"wp:attachment":[{"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/media?parent=7517"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/categories?post=7517"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/tags?post=7517"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}