FTX Investors Sue Law Firm, Alleging Role in Exchange’s Fraud

The law firm of the Silicon Valley of Fenwick & West faced accusations that they were “deeply intertwined in almost all aspects of” Crypto Exchange FTX collapse, as investors filed a lawsuit claiming that the company did not only allow fraud himself Bankman-Fied, but also helped to design it.

AND a lawsuit Submitted on Monday is part of a multiple litigation involving over 130 law companies that worked with FTX, singing out Fenwick & West as the only company facing accusations of fraud in a dedicated “legal company”.

Prosecutors claim that they can prove that the law firm had a “real knowledge” of fraud and gave “significant help” that made a scheme of more billion dollars.

The lawsuit is an attempt to respond according to the laws of the federal reaction (RICO) to the main law firm for the alleged participation in the fraud of clients, not just the provision of bad legal advice.

Investors claim that the company “designed, approved and implemented” corporate structures that enabled former FTX executive director Sam Bankman-Fied and Insiders to steal hundreds of millions of customer funds through shameful “loans”.

Game of shells?

The company has been accused of creating shellfish companies such as the northern dimension to disguise the deposits and withdrawal of customers, helping FTX avoid regulatory supervision.

However, legal experts warn that proving the guilt of a law firm requires more than an extensive engagement of clients.

Even Alex Chandra, a partner in Ignos Law Alliance, said Decipher The fact that “deeply intertwined” could simply reflect “the width of the engagement with a complex client, where a wide involvement is often needed to understand and resolve their legal needs.”

He added that “there must be proof and real knowledge of illegal actions and significant assistance in their presentation” outside the routine legal work.

AND FTX bankruptcy The independent examiner, who examined more than 200,000 documents, concluded that “Fenwick was particularly deeply intertwined in almost all aspects of the FTX Group’s injustice.”

The examiner revealed that the company had “extremely close relationships” with insiders and facilitated transactions that abused our customers’ assets.

Nishad Singh, former director of an engineer FTX who confessed guilty and cooperated with the prosecutors, testified earlier that “he informed Fenwick of the abuse of user’s means, irregular loans and false representations, and … Fenwick advised how to ease and hide those very ranks.”

Caroline EllisonFormer Alamed Research CEO also admitted that “FTX used the money for customers to help Alamedi fulfill his obligations,” confirming that she, who sprayed Bankman and other executives, knew that the buyer’s funds had been diverted to cover losses in trading.

Investors claim that Fenwick’s prestige in the Silicon Valley was crucial for Legitimization of FTX to investors and risk capitalists, helping to exchanging more than $ 1.3 billion, while allegedly knew of the risks of insolvency.

The lawsuit states that partner Tyler Newby is the author of the encrypted communication policy of FTX, which allowed the signal to disappear messages, while partner Andrew Albertson allegedly helped to relate an exchange with key risk capitalists.

FTX filed for bankruptcy on November 11, 2022, after the discovery of Alameda’s financial state.

Bankman-Fried was later convicted of seven number of fraud and sentenced to 25 years in prisonAnd since then shifted to medium security facility In California, where he continues to maintain his innocence as he appealed his belief.