Fenwick & West Denies Lawsuit Accusations of Facilitating FTX's Fraudulent Activities
Summary:
Fenwick & West, a law firm previously employed by the now-dissolved FTX crypto exchange, vehemently denies any misconduct charges brought against it in relation to its role in the exchange's suspected fraudulent activities. The firm reiterates its advisory role on regulatory compliance within the crypto landscape and asserts its blamelessness given that it neither played a sole nor substantial role in FTX's operations. The denial follows a lawsuit filed by FTX debtors against former employees of Salameda, a company linked to FTX, seeking to recover $157.3 million that were allegedly unlawfully withdrawn from the exchange.
Fenwick & West, a law firm previously engaged by the now obsolete FTX cryptocurrency exchange, has categorically repudiated lawsuit allegations that accuse it of facilitating the exchange's purported fraudulent dealings. A court filing from Sept. 21 indicates that the U.S-based legal firm denies any impropriety in supplying legal services during the operation of FTX. In accordance with well-established legal principles, a lawyer cannot be held accountable for facilitating or conspiring in a client's wrongdoing if their conduct adheres to the professional scope of client representation.
The plaintiffs allege that Fenwick supplied routine legal services within appropriate legal parameters, but Sam Bankman-Fried supposedly manipulated this guidance to further his fraudulent schemes. The claimants also contend that Fenwick's service provision to FTX exceeded customary professional standards. The filing mentions the assertion that Fenwick is liable on the grounds that it reportedly provided services beyond those traditionally given by law firms to the FTX Group.
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Further allegations state that some Fenwick employees willingly left the firm to join FTX. Meanwhile, the filing restates that Fenwick aided in setting up corporations used by Bankman-Fried in his deceptive practices, as well as advising FTX on regulatory conformity amidst an evolving crypto environment. Yet, Fenwick insists on its blamelessness, maintaining that it was not the exclusive law firm representing FTX and that its contribution was limited to offering varied legal assistance to the insolvent exchange. "If the assertions of the plaintiffs were enough to bring a claim against Fenwick for collusion and contribution to liability, then any attorney could be dragged into a courtroom and made to answer for their client's misdeeds. This is not how the law works."
This follows a lawsuit filed against prior employees of the Hong Kong-based Salameda company, formerly linked to the FTX group, by FTX debtors. FTX is seeking to recover $157.3 million, claiming the funds were unlawfully withdrawn just before the exchange declared bankruptcy.
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Published At
9/24/2023 4:24:05 AM
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