In a brand new authorized improvement, FTX prospects declare that legislation agency Fenwick & West was a “key” participant within the multi-billion-dollar fraud, alleging that the Silicon Valley agency was intertwined in lots of points of the crypto trade’s operations.
Customers Amend FTX Law Firm Track Complaint
On Monday, FTX prospects filed a movement to amend their grievance towards Silicon Valley legislation agency Fenwick & West, claiming that it performed a central position within the crypto trade’s fraud earlier than its collapse in 2022.
The submitting, which is a part of a multi-district litigation (MDL), follows the June 2023 grievance that alleged the legislation agency exceeded the norm in its providers supplied to the crypto trade and that it may very well be responsible for “conspiring in, and aiding and abetting, Bankman-Fried’s purported fraud, negligence, fiduciary breach and conversion of buyer funds.”
Notably, the legislation agency denied the claims in September 2023 with a movement to dismiss the lawsuit, arguing that every of the eight claims needs to be dismissed with prejudice as a result of Plaintiffs “have didn’t plausibly allege any of these claims,” and “are unable to amend their Complaint to state a legitimate declare for aid.”
Nonetheless, the FTX customers contemplate the amended grievance to be “extraordinarily distinctive” because the District Court for the Southern District of Florida has the “benefit” of reviewing all the finished associated investigations over the previous 2 and a half years:
This is the primary substantive modification to the FTX Law Firm Track grievance. In the almost two years which have transpired since Plaintiffs filed this MDL, a lot has transpired exterior of this litigation that highlights that Plaintiffs’ claims listed here are meritorious, and so they may even be thought-about “prevailing events” at this stage. Rather than press ahead with the unique Complaint filed two years in the past, Plaintiffs search to streamline points on this MDL: Law Firm Track. This MDL Track will now proceed with only one Defendant, Fenwick & West.
In the proposed amended grievance, the crypto trade’s prospects requested that the Court enter an order granting go away to amend their grievance to deal with these new information and deny the Motion to Dismiss as moot.
Fenwick Accused Of Crucial Role In Fraud
The 220-page doc explains that out of the 130 completely different legislation companies that provided providers to the crypto trade, solely Fenwick is called within the MDL as a result of the FTX Independent Examiner concluded that the agency was deeply intertwined in “almost each facet” of the crypto firm’s fraud and wrongdoing.
Excerpt of the amended grievance agaisnt Fenwick & West. Source: Courtlistener
According to the submitting, the agency had “precise information” of the crypto trade’s fraud and supplied “substantial help.” Additionally, Fenwick, in violation of federal racketeering legal guidelines, allegedly served as an “important member” of the FTX enterprises and promoted the sale of “unregistered securities,” in violation of the Florida (FSIPA) and California Laws (CSL).
The FTX Fraud was solely doable as a result of Fenwick supplied “substantial help” by creating and approving the constructions that allowed quite a few frauds, together with the theft of a whole lot of hundreds of thousands of {dollars} in “loans” by convicted FTX Insiders from the injured class, and Fenwick agreed to create, managed and represented clearly conflicted corporations (akin to Alameda Research, FTX, North Dimension, and so on.), which purposefully had no safeguards to forestall the billions of {dollars} that had been admittedly stolen.
The Plaintiffs highlighted that the proof from SBF’s trial exhibits that FTX insiders wanted the legislation agency’s backing and illustration, in addition to the flexibility to make use of the “nice Fenwick identify” on all associated promotions to achieve on the spot credibility on their focused buyer class and assist the crypto trade “find and procure billions of {dollars} in enterprise capital investments.” Moreover, the legislation agency additionally allegedly helped fulfill all issues by state and federal tax and securities regulators.
Ultimately, the amended grievance alleges that at finest, Fenwick dedicated skilled negligence that straight prompted billions of {dollars} in damages, and at worst was a “key and essential” participant within the crypto trade’s fraud.
Bitcoin (BTC) trades at $119,928 within the one-week chart. Source: BTCUSDT on TradingView
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