Law Firm Fenwick Faces Another Lawsuit from Crypto Customer Over FTX Work

News | August 8, 2023 By:

Fenwick & West, a California-based law firm that worked for the now-bankrupt cryptocurrency exchange FTX, is facing a lawsuit from a group of FTX customers. The lawsuit accuses the firm of helping FTX’s founder, Sam Bankman-Fried, commit fraud with his legal advice. This is not the first time Fenwick is sued for its role in FTX.

The customers filed the lawsuit on Monday, August 7, 2023, in the Northern District of California. They say Fenwick did more than what a law firm should do for FTX. They say Fenwick helped FTX avoid regulators and create entities that FTX executives used to steal customer money and spend it on risky investments and donations.

Fenwick knew a lot about FTX’s shady business practices and complex structure, according to the lawsuit. One of FTX’s former lawyers, Daniel Friedberg, who is also being sued by FTX’s new management, came from Fenwick in 2020.

The lawsuit alleges that Fenwick helped set up two entities that hid FTX executives’ actions from customers and regulators. It also says Fenwick advised on deals that let FTX get some licenses without applying to U.S. regulators.

“Fenwick helped set up the shadowy entities through which Bankman-Fried and the FTX Insiders operated a fraud, structured acquisitions by the FTX US in ways to circumvent regulatory scrutiny, advised on FTX US’s regulatory dodge, more generally, and supplied personnel necessary to execute on the strategies that they proposed,” the lawsuit said.

Bankman-Fried denied the charges against him over his alleged theft of customer money. He tried to get some Fenwick documents for his defense, but a judge said no earlier this year.

The customers want to move the lawsuit to Florida, where other FTX-related cases are being handled by one judge. Fenwick has not yet answered the lawsuit.

A copy of the original filing can be found here.