A gaggle of 20 victims from 5 international locations or jurisdictions has filed a $525 million lawsuit in opposition to Fenwick & West LLP, one in all Silicon Valley’s prime tech legislation companies, accusing it of serving to conceal the FTX fraud.
The criticism, filed Wednesday within the US District Court docket for the District of Columbia, names the agency alongside six particular person defendants. The plaintiffs say they misplaced their life financial savings when FTX collapsed, claiming that Fenwick’s involvement gave the change a false air of legitimacy that saved them from pulling their cash out.
On the heart of the case is testimony from Nishad Singh, FTX’s former director of engineering, who pleaded responsible to fraud prices and testified at Sam Bankman-Fried’s prison trial. Singh stated he personally advised Fenwick attorneys that buyer funds have been being misused, and as an alternative of strolling away, the agency suggested on easy methods to disguise it.
The criticism goes additional. It says Fenwick attorneys arrange North Dimension Inc., a Delaware shell firm that posed as an electronics retailer however funneled over $3 billion in stolen buyer funds. The agency additionally allegedly applied FTX’s Sign auto-delete messaging coverage, the identical system federal prosecutors stated helped the fraud go undetected by regulators and investigators.
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Examiner discovered Fenwick “intertwined” in FTX’s wrongdoing
A court-appointed chapter examiner, whose report got here out in 2024 after reviewing greater than 200,000 paperwork, discovered that Fenwick created the company constructions for each FTX and Alameda Analysis, fashioned shell entities to obscure cash actions, and drafted backdated agreements to cowl illicit transfers, the criticism states. The examiner concluded the agency was “deeply intertwined in practically each facet of FTX Group’s wrongdoing,” the lawsuit reads.
“These findings are these of a court-appointed officer based mostly on documentary proof in federal chapter proceedings to which Fenwick was a celebration,” the lawsuit added.
FTX victims file lawsuit in opposition to Fenwick. Supply: CourtListener
After FTX filed for chapter in November 2022, Fenwick scrubbed all mentions of the change from its web site. The agency additionally quietly employed top-tier legislation agency protection legal professionals at Gibson Dunn earlier than any civil lawsuit was filed in opposition to it, per the lawsuit.
The plaintiffs are bringing seven claims in opposition to Fenwick, together with malpractice, fraud and gross negligence. They’re looking for compensatory damages exceeding $525 million, return of all authorized charges Fenwick earned from FTX and punitive damages in opposition to companions Tyler Newby and Daniel Friedberg for “deliberate and reckless particular person skilled conduct.”
Associated: Sam Bankman-Fried withdraws movement for a brand new trial, nonetheless asks for brand spanking new choose
Decide denies SBF’s bid for brand spanking new trial
Final month, a federal choose denied Bankman-Fried’s bid for a brand new trial, calling his claims of recent proof baseless. Decide Lewis Kaplan, who sentenced the previous FTX CEO to 25 years in jail in 2024, stated Bankman-Fried’s argument that three former FTX executives might counter the federal government’s case was with out advantage, noting that he knew all three witnesses nicely earlier than the trial.
Bankman-Fried had argued that Ryan Salame and Daniel Chapsky might problem the federal government’s claims about FTX’s insolvency, and that Nishad Singh modified his testimony beneath strain from prosecutors. Kaplan dismissed these claims as “wildly conspiratorial and fully contradicted by the file.”
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