Investors affected by the collapse of cryptocurrency exchange FTX have filed an amended lawsuit against Fenwick & West, alleging that the firm played a central role in an $8 billion fraud that led to the company's collapse in November 2022.
Accusations Against Fenwick & West
The lawsuit is based on accusations that Fenwick & West is 'deeply intertwined in nearly every aspect' of FTX’s collapse and facilitated Sam Bankman-Fried’s fraud.
Background and Legal Proceedings
This lawsuit is part of a multidistrict litigation involving over 130 law firms that had business dealings with FTX. However, Fenwick & West was singled out and stands as the only firm facing fraud charges. The plaintiff claims to be able to prove that the law firm was aware of the fraud and provided 'substantial assistance' facilitating the multi-billion-dollar scheme.
FTX Asset Distribution Situation
The Fenwick lawsuit comes as FTX continues its asset distribution processes, having repaid $6.2 billion to creditors. The exchange is now disputing claims worth $800 million from 49 restricted jurisdictions, with Chinese users accounting for 82% of the disputed value despite representing only 5% of allowed claims.
The accusations against Fenwick & West raise important questions about the role of law firms in maintaining corporate structure and adhering to legal norms, especially in cases of complex financial fraud.
