A law firm that once offered services to the now-collapsed cryptocurrency exchange FTX has denied a collective lawsuit accusing it of aiding the exchange in supposed fraudulent activities.
Per a court filing on September 21, the US-based law firm Fenwick & West has refuted all charges of wrongful conduct related to its legal services provided during FTX’s operations. “It is a fundamental principle that a lawyer cannot be held accountable for conspiracy or assisting a client’s wrongdoing ‘as long as [his] behavior is within the boundaries of representing the client.’” The plaintiffs argue that although Fenwick delivered regular legal services within legal limits, Sam Bankman-Fried allegedly manipulated the advice to further his deceitful activities.
They additionally argued that Fenwick’s services to FTX went beyond standard offerings. The plaintiffs claim Fenwick is liable as it allegedly “offered services to the FTX Group entities that greatly exceeded those typically provided by a law firm,” according to the filing. It also alleges that Fenwick employees opted to leave the firm and join FTX voluntarily.
Moreover, the filing emphasized Fenwick’s role in creating corporations utilized by Bankman-Fried for fraudulent activities and advising FTX on meeting regulatory standards in the changing crypto arena.
Nonetheless, Fenwick contends it should not be held responsible as it was not the only law firm representing FTX, maintaining that it had a comparatively minor role in offering various legal counsel to the insolvent exchange. This situation follows the FTX debtors filing a lawsuit against ex-employees of the Hong Kong-registered company Salameda, formerly associated with the FTX group.
FTX has embarked on legal proceedings to recover $157.3 million, asserting that the funds were unlawfully taken just before the exchange’s bankruptcy declaration.
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