A class-action lawsuit has been filed against Fenwick & West LLP, the former primary legal counsel for FTX, claiming that the law firm assisted in enabling the cryptocurrency exchange’s purported multi-billion dollar fraudulent activities, media reports said.
The lawsuit, submitted on August 7 in a California District Court by a group of FTX customers, contended that Fenwick & West established various “shadowy entities” that allowed FTX’s co-founder Sam Bankman-Fried and other executives to engage in “innovative yet illegal tactics” to sustain the alleged fraud.
The suit has alleged that Fenwick & West’s involvement with FTX went beyond conventional legal services. This purportedly included devising strategies that circumvented regulatory scrutiny for FTX US’s acquisitions and providing personnel to execute strategies proposed by the law firm.
The lawsuit named two of these entities as North Dimension and North Wireless Dimension, which are claimed to have misappropriated FTX customer funds.
According to the plaintiffs, Fenwick & West contributed to and facilitated FTX’s alleged fraudulent activities by refraining from intervening in a series of purported misrepresentations made by FTX to its clients.
The class-action suit asserted that there was an implicit agreement between FTX US, other FTX affiliates, and Fenwick & West to deceive customers, driven by the law firm’s potential financial gain from FTX’s alleged wrongdoing.
The lawsuit identified four individuals as so-called FTX insiders: Sam Bankman-Fried, former Alameda Research CEO Caroline Ellison, former FTX co-founder Gary Wang, and former FTX engineering lead Nishad Singh.
