FTX Customers Seek to Update Lawsuit Against Fenwick & West Following New Evidence from Bankman-Fried’s Trial

• New evidence from Bankman-Fried’s trial indicates Fenwick & West’s involvement in FTX’s fraudulent activities.

• FTX customers allege Fenwick provided substantial assistance in structuring fraudulent operations.

• The lawsuit now includes new claims of securities violations in Florida and California.

FTX customers are updating their lawsuit against Fenwick & West, citing new evidence from Sam Bankman-Fried’s trial that implicates the law firm in FTX’s collapse.

What is the Update on the FTX Lawsuit Against Fenwick & West?

The FTX customers are seeking to amend their lawsuit against Fenwick & West, claiming that new evidence from Sam Bankman-Fried’s trial reveals the law firm’s significant role in FTX’s fraudulent activities.

How Did Bankman-Fried’s Trial Affect the Lawsuit?

During Bankman-Fried’s trial, testimonies from FTX insiders indicated that Fenwick was aware of the misuse of customer funds and provided legal advice on how to conceal these actions. This has led to a reevaluation of Fenwick’s involvement in the fraudulent practices of FTX.

Frequently Asked Questions

What are the main claims against Fenwick & West?

The main claims include allegations that Fenwick assisted in structuring fraudulent operations and violated securities laws in multiple states.

How is Fenwick responding to the allegations?

Fenwick has denied the allegations and filed motions to dismiss the claims, arguing that their actions were within the scope of representing their client.

Key Takeaways

• New Evidence: Testimonies from Bankman-Fried’s trial reveal Fenwick’s involvement in FTX’s fraudulent activities.
• Legal Implications: The lawsuit now includes claims of securities violations in multiple states.
• Ongoing Developments: The case continues to evolve as more evidence is presented in court.

Conclusion

The ongoing legal battle between FTX customers and Fenwick & West highlights the complexities of the case and the significant implications of the new evidence presented. As the situation develops, it remains crucial for stakeholders to stay informed about the evolving legal landscape surrounding FTX.

• FTX customers are updating their lawsuit against Fenwick & West, citing new evidence from Sam Bankman-Fried’s trial that implicates the law firm in FTX’s collapse.

• The filing claims Fenwick provided substantial assistance in structuring fraudulent operations.

• New claims of securities violations in Florida and California have been added to the lawsuit.

FTX customers are updating their lawsuit against Fenwick & West, citing new evidence from Sam Bankman-Fried’s trial that implicates the law firm in FTX’s collapse.

Bankman-Fried’s Trial Uncovers New Information

The proposed amended complaint claims that Bankman-Fried’s criminal trial last year had uncovered new information about how Fenwick had assisted FTX.

FTX co-founder Zixiao “Gary” Wang, former Alameda CEO Caroline Ellison, and FTX’s ex-engineering director Nishad Singh pleaded guilty and testified against Bankman-Fried, with a jury finding him guilty on seven charges relating to fraud and money laundering.

“At SBF’s criminal trial, FTX Insider and co-founder Nishad Singh testified that he informed Fenwick of the misuse of customer funds, improper loans, and false representations, and that Fenwick advised on how to facilitate and hide these very acts,” the filing said.

The group claimed in a separate filing that it “has learned many more details on Fenwick’s relationship to FTX, based upon the interviews cooperation of the settled FTX Insiders.”

Bankruptcy Court Finds Fenwick “Deeply Intertwined” with FTX

The filing claimed that an independent examiner appointed by the court handling FTX’s bankruptcy proceedings “reviewed over 200,000 internal documents (many related directly to Fenwick) and concluded that Fenwick specifically was deeply intertwined in nearly every aspect of FTX Group’s wrongdoing.”

According to the group, the examiner found Fenwick had “exceptionally close relationships” with FTX’s executive team and “facilitated conflicted intercompany transactions that misused customer assets.”

They also said the examiner accused Fenwick of creating shell companies “to obscure asset movements” and was behind implementing auto-deleting messages sent between FTX executives via the encrypted messaging app Signal.

Related: Binance founder Changpeng Zhao seeks dismissal of $1.8B FTX lawsuit

The group accused Fenwick of also implementing “other concealment practices that regulators and prosecutors later cited as obstruction” and claimed the law firm “knew that these actions would mislead investors and regulators.”

Fenwick Hit with Two New Securities Claims

The proposed complaint adds two new state law claims, accusing Fenwick of violating securities laws in Florida and California over the exchange’s cryptocurrency, FTX Token (FTT).

The group accused the law firm of playing “an active role in designing, promoting, and facilitating the sale” of FTT, yield-bearing accounts offered by FTX, and “interests in other FTX-controlled instruments,” which they claimed were unregistered securities.

Fenwick argued in its motion to dismiss the previous complaint filed in September 2023 that it can’t be held accountable for aiding a client’s wrong as long as its “conduct falls within the scope of the representation of the client.”

The group had also sued Sullivan & Cromwell, another law firm that FTX had contracted, accusing it of helping the exchange, but they later dropped the complaint due to a lack of evidence for their claims.