Customers of the bankrupt cryptocurrency exchange FTX are seeking to update their lawsuit against Fenwick & West, one of the law firms previously contracted by the company, claiming new information shows that the firm played a central role in FTX's collapse.
FTX customers wrote in amended court documents submitted on Monday that the criminal trial of former FTX CEO Sam Bankman-Fried and investigations in the exchange's bankruptcy proceedings "have produced specific evidence demonstrating that Fenwick played a key and decisive role in the most important aspects of how and why the FTX fraud was perpetrated."
"In simple terms, the FTX fraud was made possible because Fenwick provided 'substantial assistance' by creating and approving a structure that allowed numerous fraudulent activities," the group stated.
They accused the law firm of agreeing to create, manage, and represent "companies with obvious conflicts of interest," such as FTX's sister trading firm Alameda Research and its subsidiary North Dimension, "which deliberately had no safeguards to prevent the misappropriation of billions of dollars."
The fraud at FTX has been described by prosecutors as one of the largest fraud cases in U.S. history.
The document is part of a massive multi-district class action lawsuit filed by FTX users after the exchange's collapse at the end of 2022, which claims against the exchange, celebrities accused of promoting FTX, and various companies allegedly associated with the firm.
Fenwick has denied the allegations and filed a motion to dismiss the claims in a previous complaint submitted in August 2023. Fenwick & West did not immediately respond to Cointelegraph's request for comment.
The proposed amended complaint claims that Bankman-Fried's criminal trial last year revealed new information about how Fenwick assisted FTX.
FTX co-founder Gary Wang, former Alameda CEO Caroline Ellison, and former FTX engineering director Nishad Singh pleaded guilty and testified against Bankman-Fried, with the jury finding him guilty on seven counts related to fraud and money laundering.
"In SBF's criminal trial, FTX insiders and co-founder Nishad Singh testified that he informed Fenwick that customer funds were being misused, improperly loaned, and falsely represented, and that Fenwick provided advice on how to facilitate and conceal these actions," the document states.
The group claims in a separate filing that "based on interviews and cooperation with FTX insiders who have settled, more details about Fenwick's relationship with FTX have been uncovered."
The document claims that the independent examiner appointed by the court handling FTX's bankruptcy proceedings "reviewed over 200,000 internal documents (many directly related to Fenwick) and concluded that Fenwick was specifically deeply involved in nearly every aspect of the FTX group's misconduct."
According to the group, the examiner found that Fenwick had an "unusually close relationship" with the FTX executive team and "facilitated conflict-of-interest transactions that abused customer assets."
They also stated that the examiner accused Fenwick of creating shell companies "to obscure asset flows" and was responsible for implementing the use of self-destructing messages sent between FTX executives via the encrypted messaging app Signal.
The group accused Fenwick of also implementing "other concealment practices later cited by regulators and prosecutors as obstructing justice," claiming that the law firm "knew these actions would mislead investors and regulators."
The proposed complaint adds two new state law claims, accusing Fenwick of violating Florida and California securities laws regarding the exchange's cryptocurrency FTX token (FTT).
The group alleges that the law firm played an "active role" in "designing, promoting, and facilitating the sale" of FTT, interest-bearing accounts offered by FTX, and "other equity interests in tools controlled by FTX," which they claim are unregistered securities.
Fenwick argued in a motion submitted in September 2023 to dismiss the previous complaint that it cannot be held liable for assisting its client's wrongful conduct as long as its "actions fall within the scope of representing the client."
The group also sued Sullivan & Cromwell, another law firm contracted by FTX, accusing it of assisting the exchange, but later withdrew the complaint due to a lack of evidence supporting their claims.
Related: South Korean investors shift from major U.S. tech stocks to cryptocurrency-related stocks
Original article: “FTX Users Seek to Update Lawsuit Against Fenwick & West, Claiming the Law Firm Was Key to FTX Fraud”
免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。
