A group of FTX customers has brought a class action suit against the exchange’s law firm.
Fenwick & West LLP is being sued for allegedly aiding fraud through its legal advice to the crypto exchange.
The law firm has been accused of setting up entities used to perpetrate fraud and structuring transactions to avoid scrutiny.
Sam Bankman-Fried previously cited legal advice from Fenwick & West to bolster his defense.
Fenwick & West LLP, the California-based law firm that served as the primary outside counsel for FTX, is being sued by the bankrupt crypto exchange’s customers. The customers have brought a class action lawsuit against the law firm for its alleged role in aiding fraud through the legal advice it provided to the crypto exchange before its collapse last year.
Fenwick Was Aware Of FTX’s Shady Business Practices?
A group of FTX customers filed a class action lawsuit against the exchange in the U.S. District Court for the Northern District of California, though the plaintiffs plan to transfer it to the Southern District of Florida, Reuters reported earlier today. Earlier this year, a judicial panel ordered the consolidation of multiple lawsuits related to the bankrupt exchange in Miami where they would be heard by Federal Judge Michael Moore.
The latest complaint alleged that the services extended to FTX by Fenwick & West went beyond what a law firm usually provides to its clients. The crypto exchange’s customers accused the law firm of setting up “shadowy entities” that were used by founder Sam Bankman-Fried and his inner circle to commit fraud and structure the exchange’s transactions in ways that allowed them to circumvent regulatory scrutiny.
“When asked by FTX Group executives for counsel, Fenwick lawyers were eager to craft not only creative, but illegal strategies.”
Complaint against Fenwick & West LLP
The customers further alleged that through its unique position and proximity to FTX’s operations, Fenwick & West was aware of the exchange’s complicated organizational structure, lack of internal controls, and dubious business practices. The class action lawsuit is the second FTX-related legal matter to hit the law firm. Earlier this year, Sam Bankman-Fried attempted to subpoena Fenwick to prove that he was acting on legal advice provided by the law firm during his stint as the exchange’s Chief Executive.