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Fenwick & West LLP, the Former Counsel of FTX, Slapped with A Class-Action Lawsuit
Fenwick & West LLP, a law firm that previously represented the crypto exchange FTX, is the subject of a recent class-action suit. The suit, filed by a group of FTX customers, accuses the company of facilitating FTX in alleged fraudulent practices reaching into the billions.
Alleged Fraudulent Activities
The complainants, in a filing made available on August 7, claimed that Fenwick & West LLP helped create several obscure entities, which gave a platform for Sam Bankman-Fried, the co-founder of FTX, and similar executives to carry out creative but unlawful maneuvers to further their fraudulent actions.
Role of Fenwick & West LLP
The plaintiffs argue that the services Fenwick & West offered to FTX go beyond what's usually delivered by a regular law firm. The allegations include facilitating FTX’s acquisitions in a way that dodged the regulatory radar and providing staff to carry out the law firm’s suggested strategies.
The supposedly clandestine entities were identified as North Dimension and North Wireless Dimension. According to the lawsuit, these organizations were allegedly conduit platforms for misused FTX customer funds.
Accusations of Assisting in Deceptive Practices
In the class-action case, it's asserted that Fenwick & West LLP tacitly consented to FTX’s supposed deception of its customers by opting not to act on multiple misrepresented messages purportedly made by FTX. An alleged silent agreement between Fenwick & West LLP and different FTX affiliates including FTX US, claims they all contributed to the potential scam, with the law firm's financial benefit being the driving factor.
Four key FTX figures accused by the complainants include FTX co-founder and Alameda Research former CEO Sam Bankman-Fried, ex-FTX engineering lead Nishad Singh, past Alameda Research CEO Caroline Ellison, and former FTX co-founder Gary Wang.
Previous Legal Troubles for Fenwick & West LLP
Fenwick & West LLP was also the subject of a similar class-action suit in February, which made analogous accusations of supposed facilitation of FTX’s unscrupulous practices.
In response, the law firm recently brought on board the services of Gibson Dunn, a legal heavyweight, to handle ensuing legal issues related to its accused involvement with FTX, as reported by Reuters on June 21.
FTX's Bankruptcy and Founders' Legal Troubles
FTX ran aground and filed for bankruptcy protection when it failed to process a significant amount of customer withdrawal requests in November 2022. Criminal charges including wire fraud, conspiracy, and money laundering are hanging over the head of Bankman-Fried, who is currently under house arrest and expected to face two criminal trials in October and March.
Despite a previous charge relating to unlawful campaign financing being dropped because of a potential treaty violation with the Bahamas, the prosecutors have expressed their intention to reintroduce it on August 8th.
No Immediate Response From Fenwick & West LLP
While Fenwick & West LLP is yet to respond to requests for comments on the issue, the implications of these charges and lawsuits are sure to be a topic of debate in the crypto community.
