Fenwick & West, a prominent law firm previously engaged by the now-defunct cryptocurrency exchange, FTX, is seeking to dismiss a proposed lawsuit that alleges its involvement in the fraudulent activities leading to the exchange’s collapse. The updated class-action lawsuit, initially filed in 2023, has been revised by FTX users who claim that new findings from bankruptcy and criminal proceedings indicate that Fenwick was instrumental in facilitating the fraud.
In a filing submitted to a federal judge in Florida, Fenwick & West asserted that the claims against them are unfounded and should be rejected. The law firm contends that the assertion that it aided in FTX’s fraudulent activities is “as facile as it is flawed.” Fenwick emphasized that it cannot be held liable for facilitating a fraud it was unaware of, maintaining that the legal services it provided were routine and lawful.
The allegations against Fenwick are rooted in a broader multi-district class-action lawsuit brought by FTX users following the exchange’s dramatic collapse in late 2022. The lawsuit has previously included claims against various celebrities and companies associated with FTX, with some claims being dropped due to insufficient evidence. Fenwick argues that the proposed amendments to the complaint are “untimely,” based on stale information that has been available to the plaintiffs for years, and asserts that the new claims are misleading and futile.
Fenwick further noted that the allegations against them closely resemble those previously made against another law firm, Sullivan & Cromwell. The claims against Sullivan were dismissed after an investigation concluded that they were unaware of FTX’s fraudulent activities. “They offer no credible reason why the same allegations should survive against Fenwick,” the firm stated in its filing.
Additionally, Fenwick refuted claims made by Nishad Singh, FTX’s former lead engineer, who testified during co-founder Sam Bankman-Fried’s criminal trial. Singh claimed that Fenwick was aware of and helped conceal the misuse of customer funds. Fenwick countered this statement, asserting that Singh had only indicated that the firm provided advice on structuring founder loans, a common practice for closely held companies like FTX. The law firm highlighted that numerous witnesses in Bankman-Fried’s trial testified that the fraudulent activities were conducted without the knowledge of even FTX’s internal legal team.
Moreover, Fenwick criticized the new allegations suggesting that it assisted in the launch and promotion of the FTX Token (FTT), asserting these claims violate securities laws in Florida and California. The firm labeled these accusations as “far-fetched” and argued that if the plaintiffs genuinely believed they had a case, they would have raised these issues much earlier in the proceedings. “These new claims come far too late,” Fenwick stated, emphasizing that this appears to be an eleventh-hour attempt to circumvent the court’s previous rulings regarding other defendants.
As legal proceedings continue, Fenwick & West maintains its stance that it has acted within the bounds of the law and that the allegations against it are without merit. This ongoing legal saga highlights the complexities and challenges faced in the rapidly evolving landscape of cryptocurrency regulation and accountability.
For more information on this developing story, please refer to the source: Cointelegraph.
