Regulation Agency Fenwick Rejects Claims It Helped Allow FTX Collapse

Fenwick & West, a outstanding Silicon Valley legislation agency, has rejected allegations that it performed a central function within the collapse of crypto alternate FTX, calling the claims “facile” and “flawed” in a courtroom submitting on Monday.

Key Takeaways:

• Fenwick & West has rejected claims it enabled FTX’s collapse, calling the allegations speculative and flawed.
• The agency argues it solely offered routine authorized providers and had no data of fraud.
• Fenwick says the amended lawsuit recycles claims already dismissed in related instances, together with these towards Sullivan & Cromwell.

The authorized pushback is available in response to an amended class-action lawsuit filed by FTX prospects earlier this month in a Florida federal courtroom.

Plaintiffs are searching for to replace their 2023 swimsuit, arguing that latest revelations from FTX’s chapter proceedings and the legal trial of founder Sam Bankman-Fried counsel Fenwick offered key authorized help that enabled the fraud.

Fenwick Dismisses FTX Allegations as Speculative and Deceptive

In its submitting, Fenwick dismissed the allegations as speculative and deceptive, asserting it merely offered routine authorized providers typical of any exterior counsel.

“Fenwick will not be answerable for aiding and abetting a fraud it knew nothing about,” the agency wrote, “based mostly solely on allegations that Fenwick did what legislation companies do day-after-day — present routine and lawful authorized providers to their shoppers.”

The plaintiffs’ broader class-action case additionally contains claims towards celebrities and firms linked to FTX.

Whereas legislation agency Sullivan & Cromwell was initially named within the case, it was later dropped after a court-appointed examiner discovered no proof the agency had data of the fraud.

Fenwick mentioned the most recent grievance recycles related accusations beforehand made towards Sullivan & Cromwell, noting the plaintiffs “supply no credible motive why the identical allegations ought to survive towards Fenwick.”

Central to the brand new claims is testimony from Nishad Singh, FTX’s former lead engineer, who reportedly mentioned Fenwick’s involvement in structuring loans.

Fenwick countered that Singh didn’t accuse the agency of serving to cowl up misuse of buyer funds. As an alternative, the testimony described customary authorized work on “founder loans,” that are widespread in startups.

Fenwick additionally argued that dozens of witnesses in Bankman-Fried’s legal trial testified to being unaware of the fraud, together with FTX’s inner legal professionals, staff, and different exterior advisors, including that “Fenwick isn’t any totally different.”

Fenwick Rejects Claims It Promoted FTX’s FTT Token

The agency additional criticized new allegations that it helped launch and promote FTT, FTX’s alternate token, as violating Florida and California securities legal guidelines.

Fenwick labeled these claims “frivolous” and “premature,” accusing plaintiffs of submitting them solely after a decide allowed state securities claims to proceed towards superstar endorsers.

“That is an eleventh-hour try and recast legal professionals as ‘promoters,’” Fenwick mentioned. “However this idea too goes nowhere.”

The courtroom has but to rule on whether or not the amended grievance shall be accepted.

As reported, FTX has introduced that it’ll start its subsequent spherical of money distributions to collectors on or round September 30, 2025. The report date for eligible claimants was set for August 15.

The funds shall be processed by FTX’s designated distribution companions, together with BitGo, Kraken, and Payoneer.

In the meantime, a Chinese language creditor representing over 300 customers is opposing FTX’s proposal to limit payouts in 49 jurisdictions, together with China, arguing it’s legally unfounded and unfair.

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