Fenwick & West LLP, a law firm that previously represented the now-defunct cryptocurrency exchange FTX, has rejected allegations made in a class-action lawsuit. The suit claimed that the firm played a role in facilitating fraudulent activities by the exchange.
Fenwick & West firmly deny any wrongdoing related to the legal services it provided during FTX's operation, as stated in a court filing on September 21. The firm cited that lawyers cannot be held responsible for conspiracy or aiding and abetting their client's actions, provided their conduct falls within the scope of their client's representation. The plaintiffs argue that while the law firm offered standard legal services within the boundaries of the law, Sam Bankman-Fried allegedly misused that advice for fraudulent purposes.
The plaintiffs also contended that Fenwick & West may bear liability because it allegedly provided services to FTX Group entities that went beyond what a law firm typically offers. They claimed that Fenwick employees willingly left the firm to join FTX.
Moreover, the filing suggests that Fenwick played a role in setting up the companies used by Bankman-Fried for fraudulent activities and provided advice to FTX on regulatory compliance in the evolving cryptocurrency sector.
However, Fenwick & West argued that it should not be held accountable because it wasn't the sole law firm representing FTX. The firm asserted that it had a relatively limited role in offering legal counsel on various aspects to the now-insolvent exchange.
The law firm emphasized that if the plaintiffs' allegations were deemed sufficient to establish conspiracy and aiding and abetting liability against them, it would set a precedent where any attorney could be brought to court to answer for their client's misconduct. Fenwick & West firmly stated, "That's not the law."
Previously, FTX debtors had filed a lawsuit against former employees of Salameda, a Hong Kong-registered company formerly part of the FTX Group. FTX sought legal action to recover $157.3 million, claiming the funds were wrongfully withdrawn shortly before the exchange filed for bankruptcy.
