Former FTX legal adviser Fenwick & West is moving to dismiss the lawsuit that alleges it played a key role in the multi-billion-dollar fraud.
Summary
- Fenwick & West is moving to dismiss a lawsuit accusing it of involvement in the FTX fraud.
- The law firm argues that after over two years of litigation, there is no evidence it knew about FTX’s wrongdoing.
- Plaintiffs allege Fenwick provided “substantial assistance” to FTX, including structuring corporate arrangements and facilitating unregistered token sales.
FTX’s former counsel Fenwick & West has denied allegations that played a key role in the fraudulent practices and eventual collapse of the exchange. In a recent court filing, the team argued that after more than two years of litigation, there is still no evidence that it was aware of FTX’s alleged wrongdoing.
‘Facile and flawed:’ Fenwick slams FTX fraud allegations
The team’s filing is in response to the Aug. 11 request by plaintiffs to update their lawsuit against the team, which highlighted that evidence from Sam Bankman-Fried’s criminal trial and FTX’s bankruptcy proceedings shows Fenwick was deeply involved in the most important aspects of why and how the FTX fraud was perpetuated.
The legal team argued that while it provided routine legal services to the exchange, that does not make it liable for the fraud. Fenwick also challenged claims citing testimony from Sam Bankman-Fried’s criminal trial, calling them misleading or inaccurate, noting that multiple witnesses confirmed the exchange’s executives carried out the scheme without the knowledge of outside lawyers or advisers.
“Plaintiffs’ core theory is as facile as it is flawed. Fenwick is not liable for aiding and abetting a fraud it knew nothing about, based solely on allegations that Fenwick did what law firms do every day—provide routine and lawful legal services to their clients,” the team argued.
Fenwick further said the plaintiffs’ attempt to amend the complaint appears aimed at delaying the case and adding claims that were previously dismissed against other defendants. It stressed that the customers used similar aggressive allegations against another law firm, Sullivan & Cronwell, and the case was eventually dismissed due to the lack of sufficient evidence.
Alleged Fenwick & West ties to FTX explained
FTX customers first filed their lawsuit against Fenwick & West in 2023, claiming the firm played a central role in designing corporate structures that allowed billions in customer funds to be diverted and mismanaged.
The plaintiffs cited evidence from Sam Bankman-Fried’s criminal trial and the bankruptcy proceedings, alleging that Fenwick was involved in key decisions that enabled the fraud. The latest amendment added that the firm provided “substantial assistance” to the exchange by representing FTX-related entities, including Alameda Research and its subsidiary North Dimension, despite their “purposeful” lack of safeguards to prevent misuse of assets.
Plaintiffs also pointed to testimony from former executives, including Nishad Singh, Gary Wang, and Caroline Ellison, who allegedly said Fenwick knew about improper loans, false statements, and misuse of customer funds, and in some cases, advised on ways to hide these actions.
The filing further claimed that Fenwick helped design and facilitate the sale of unregistered securities, including the exchnage’s native token FTT (FTT) sales. It also cited findings from an independent FTX bankruptcy examiner, who reviewed over 200,000 documents and reportedly concluded that Fenwick had “exceptionally close relationships” with FTX leadership and was “deeply intertwined” in many aspects of the exchange’s misconduct.
Despite the bold allegations, Fenwick remains firm in its denial, now asking the court to deny the request to amend and proceed with its motion to dismiss the lawsuit.
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