Fenwick & West, a United States-based law firm, has vehemently refuted allegations in a recent class-action lawsuit brought against it in connection with its past legal services provided to the now-defunct cryptocurrency exchange, FTX.
The firm stands accused of aiding and abetting FTX’s purported fraudulent activities.
In a court filing dated September 21, Fenwick & West firmly denies any wrongdoing, invoking the legal principle that attorneys cannot be held liable for their clients’ misconduct as long as their actions remain within the scope of the client’s representation.
The plaintiffs allege that while Fenwick rendered standard legal services in compliance with the law, FTX’s founder, Sam Bankman-Fried, allegedly misused this advice to further fraudulent activities.
Furthermore, the plaintiffs contend that Fenwick went beyond the typical scope of services provided to FTX, potentially making them liable.
According to the filing, Fenwick “provided services to the FTX Group entities that went well beyond those a law firm should and usually does provide.”
The filing also claims that some Fenwick employees willingly left the firm to join FTX, suggesting that their actions were not coerced.
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The lawsuit asserts that Fenwick played a role in establishing corporations that Bankman-Fried allegedly used in his fraudulent activities.
Additionally, it provided advice to FTX regarding regulatory compliance in the evolving cryptocurrency landscape.
Fenwick & West, however, maintains that it should not be held solely responsible for FTX’s actions, asserting that it played a relatively minor role in providing various legal advice components to the exchange.
The firm argues that if the plaintiffs’ allegations were to hold, it would set a dangerous precedent where lawyers could be held accountable for their clients’ misconduct.
This legal dispute follows FTX’s own legal action against former employees of Salameda, a Hong Kong-incorporated company previously affiliated with the FTX group.
FTX seeks to reclaim $157.3 million, alleging that these funds were illicitly withdrawn shortly before the exchange filed for bankruptcy.
In essence, the legal battle between Fenwick & West and the plaintiffs hinges on whether the law firm’s actions can be directly linked to FTX’s alleged fraudulent activities or if they were merely providing standard legal services within the boundaries of their representation.
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