Former users of the collapsed crypto exchange FTX are asking a court to let them update their lawsuit against Fenwick & West.
The customers claimed the scheme could not have happened without Fenwick’s help. According to a filing dated August 11, the law firm designed and approved company structures that allowed money to be taken without safeguards.
They said Fenwick agreed to work with linked companies like Alameda Research and North Dimension, which had no controls to stop the billions in customer funds that were later admitted to have been stolen.
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Much of their new filing is based on testimony from Sam Bankman-Fried’s criminal trial. He was found guilty on seven charges, including fraud and money laundering, after three former senior executives, Zixiao “Gary” Wang, Caroline Ellison, and Nishad Singh, testified against him.
The plaintiffs also cited findings from an independent examiner in the bankruptcy process. The examiner reviewed more than 200,000 internal records, many tied to Fenwick. They concluded the law firm had very close ties to FTX leaders and was involved in internal deals that misused customer funds.
The examiner also said Fenwick created shell companies to hide the movement of assets and set up encrypted Signal chats between executives that automatically deleted messages.
Additionally, the updated filing added new claims under Florida and California state securities laws. The customers said Fenwick was involved in creating, promoting, and helping sell the FTX Token (FTT), yield accounts, and other products controlled by the exchange. They argued these were unregistered securities.
Recently, Changpeng Zhao asked a US bankruptcy court to reject a $1.8 billion lawsuit brought by FTX. What did he say? Read the full story.
