FTX Lawsuit Update: Allegations of a ‘Shadow Entity’ Emerge in Crypto World

• A lawsuit has been filed against FTX’s former law firm Fenwick&West, alleging the creation of ‘shadow entities’.
• The lawsuit claims that the firm managed malicious transactions of FTX and other executives.
• It is asserted that the exchange’s illegal operations were conducted through these companies.

In a recent development, FTX’s former legal firm, Fenwick&West, has been sued over allegations of setting up ‘shadow entities’ to facilitate illicit activities. The lawsuit alleges that the firm was instrumental in managing malicious transactions on behalf of FTX and its executives. It is further claimed that the exchange’s unlawful operations were carried out via these entities.

Legal Trouble for FTX’s Former Law Firm

Fenwick&West, the previous legal firm for the cryptocurrency exchange FTX, is facing a class-action lawsuit. The firm is accused of aiding and abetting FTX in fraudulent activities worth billions of dollars. The lawsuit was filed in a California district court by the exchange’s users.

Allegations of Shadow Entities

According to the lawsuit, the law firm set up shadow entities to manage FTX’s illegal transactions. These entities are alleged to have adopted innovative but unlawful strategies. The law firm is accused of being complicit in the fraud perpetrated by Sam Bankman-Fried and other FTX executives.

Claims of Regulatory Evasion

The plaintiffs argue that the law firm’s actions went far beyond the services a legal firm is expected to provide. The lawsuit points out that acquisitions made by FTX US were structured in a way to evade regulatory scrutiny. It is also alleged that the law firm provided personnel to FTX to manage its strategies.

Conclusion

The alleged shadow entities are claimed to be named North Dimension and North Wireless Dimension. This is not the first time Fenwick & West has faced such allegations. In February, a similar lawsuit was filed against the firm, accusing it of assisting FTX.