Summary
- Fenwick & West seeks dismissal of a lawsuit claiming the firm supported FTX’s fraud, stating they were unaware of any misconduct.
- The firm contends it offered only “standard and lawful legal services,” even though a bankruptcy examiner noted “exceptionally close relationships” with FTX executives.
- Attorneys assert that the plaintiffs are reiterating claims from a previously dismissed case involving another FTX advisor, Sullivan & Cromwell, without demonstrating knowledge of fraud.
Former legal advisors to FTX, Fenwick & West, have filed a motion to dismiss allegations of their involvement in the multi-billion dollar downfall of the exchange.
According to the firm, after two years of legal proceedings, the plaintiffs still haven’t proven that Fenwick & West had any knowledge of fraud by its client.
The lawsuit, initiated in 2023, names numerous defendants that investors allege were aware of FTX’s fraudulent activities, including crypto exchange Binance, the Federal Deposit Insurance Corporation, supermodel Gisele Bundchen and her former husband, NFL star Tom Brady, the NBA’s Golden State Warriors, venture capitalist Kevin O’Leary, and tennis player Naomi Osaka.
Fenwick is insistent on its exclusion from the situation and did not provide an immediate comment to Decrypt.
“The core theory of the plaintiffs is as simplistic as it is erroneous,” the firm stated. “Fenwick cannot be held liable for aiding and abetting a fraud it had no knowledge of, based solely on the assumption that Fenwick performed customary and lawful services for its clients.”
FTX collapsed in 2022 after it became evident that the exchange was utilizing client funds, its own FTT exchange token, and shares from Robinhood to support its sister organization, Alameda Research.
Over the past few years, FTX’s founder and former CEO Sam Bankman-Fried has been sentenced to 25 years in prison, while former Alameda Research CEO Caroline Ellison received a more lenient 2-year sentence as part of a plea agreement, with billions returned to the company’s creditors.
An independent bankruptcy examiner reviewed extensive internal documents from FTX, ultimately concluding that Fenwick & West had “exceptionally close relationships” with FTX leadership and became “deeply involved” in the firm’s operations.
However, the firm contended in its latest filing that the plaintiffs, a group of FTX investors, are making claims that have been “reiterated from a report” on Sullivan & Cromwell, another firm that advised FTX.
“What the Plaintiffs fail to clarify is that their allegations against Fenwick resemble those they previously pursued aggressively against Sullivan & Cromwell, which they then abruptly dismissed with prejudice,” Fenwick stated.
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