In the fourth quarter of 2022, cryptocurrencies took a difficult path and continue to move forward due to the collapse of the FTX exchange. Firstly, the collapse of FTX caught the attention of regulators. On the other hand, the United States began to realize the need for crypto regulations. As a result, there have been massive sell-offs in the markets.
A law firm that provided services to FTX was targeted in a recently filed lawsuit. The firm was accused of assisting Sam Bankman-Fried in illegal activities, and they wasted no time in responding to these allegations.
A law firm that previously served FTX has rejected a collective lawsuit filed against them, alleging that they aided the alleged fraudulent activities of the exchange. According to a court filing dated September 21, Fenwick & West denies all allegations of misuse during FTX operations;
“It is a well-established law that an attorney cannot be held responsible for aiding or conspiring in their client’s wrongdoings, as long as their conduct falls within the scope of representing the client.”
The plaintiffs claim that despite Fenwick providing regular legal services within the framework of the law, they allege that Sam Bankman-Fried misused these recommendations to further fraudulent activities. It was also alleged that the services provided by the law firm went beyond the norms.
“The plaintiffs claim that Fenwick can be held responsible for providing services that go beyond what a law firm should provide and typically provides.”
The allegations against the law firm are quite detailed. It is claimed that the firm provided advice to FTX regarding regulatory proposals presented by SBF before the bankruptcy and that some of its employees joined FTX. This also indicates that the relationship between FTX and Fenwick could be much deeper and more complex.
However, Fenwick argued that they should not be held responsible since they were not the only law firm representing FTX.
“If the plaintiffs’ allegations were sufficient to claim conspiracy and aiding and abetting liability against Fenwick, then any attorney could be brought to court and forced to account for their client’s wrongful behavior. The law does not work that way.”
This development occurred after FTX debtors filed lawsuits against former employees of Salameda, a Hong Kong-based company that was previously affiliated with the FTX group.