A group of FTX investors has filed a class action suit against FTX’s primary counsel Fenwick & West LLP, court filings reveal. According to the court document, the plaintiffs are suing the law firm for contributing to the “largest financial fraud in US history” that went in on the crypto exchange and subsequently led to its collapse. This latest lawsuit adds to a long list of legal battles directly or indirectly to the defunct crypto exchange.
Was Fenwick & West LLP In On All Of It?
FTX’s former CEO, Sam Bankman-Fried (SBF), had previously hired the legal services of Fenwick & West LLP in a move to strengthen his defense. The California-based law firm acted as the primary outside counsel for the defunct FTX US.
However, these group of investors are alleging that Fenwick & West LLP did more than just provide legal services as, according to them, the defendant “directly perpetrated, conspired to perpetrate, and/or aided and abetted the FTX Group’s multi-billion-dollar frauds for their own financial and professional gain.”
As alleged in the lawsuit, the firm’s lawyers were quick to “craft” and provide “not only creative but illegal strategies” to FTX Group executives. Part of these strategies was that the law firm set up “shadowy entities,” which allowed SBF and other top executives to perpetuate the fraud and structured FTX’s acquisitions in a way that allowed them to evade regulatory scrutiny.
The plaintiffs recognize the fact that the federal bankruptcy proceedings against FTX could linger for many years, and even at that, there is no guarantee that investors will recoup their money in full.
As such, they believe that this class action may be the only avenue to get some compensation if it is proven that Fenwick & West actively participated in the fraud that went on at FTX.
Not The First Time
This isn’t the first FTX-related class action filed against Fenwick & West LLP. Earlier this year, the law firm was among the defendants named in a class-action suit filed in a Miami Federal court that also alleged that certain companies aided the massive fraud perpetuated by SBF. According to the court document, Fenwick & West LLP provided services that were “central to SBF’s fraud.”
The latest class action suit was filed in the Northern District of California but will most likely be transferred to the Southern District of Florida, where other FTX-related lawsuits are being heard.
Earlier this year, a judicial panel had ordered the consolidation of multiple lawsuits related to the crypto exchange be filed in Miami and be heard by Federal Judge Michael Moore.
