A class-action complaint alleging that a law company helped the now-defunct cryptocurrency exchange FTX commit fraud has been rejected by the firm, which previously supplied legal services to the exchange.
The American law firm Fenwick & West has filed a court document on September 21 in which it disputes all allegations of wrongdoing regarding the rendering of legal services during FTX operations:
An attorney cannot be held accountable for conspiring with another person or helping a client commit a crime “‘as long as [his] conduct falls within the scope of the client’s representation,'” according to black-letter law.
While Fenwick purportedly offered routine legal services within the parameters of the law, the plaintiffs claim that Sam Bankman-Fried allegedly utilised the counsel to further his fraudulent operations.
They added that Fenwick’s service offers to FTX were above and beyond the norm.
The plaintiffs assert that Fenwick can be held accountable because it allegedly “provided services to the FTX Group entities that went well beyond those a law firm should and usually does provide,” according to the lawsuit.
Furthermore, it asserts that Fenwick staff members deliberately left the company to work for FTX.
The filing also reaffirmed that Fenwick provided assistance in setting up organisations utilised by Bankman-Fried in his scam and provided FTX with regulatory compliance advice in the context of the developing crypto ecosystem.
Fenwick countered that since another law firm also represented FTX, it should not be held accountable. It claims that its involvement in giving the bankrupt exchange legal advice on different topics was extremely minimal.
“If Plaintiffs’ allegations were sufficient to state a claim against Fenwick for conspiracy and aiding and-abetting liability, then any lawyer could be hauled into court and forced to answer for his client’s misconduct. That is not the law.“
This comes after FTX debtors sued former Salameda staff members who used to work for the FTX group’s linked Hong Kong company Salameda.
FTX filed a lawsuit to recover $157.3 million, claiming the money was wrongfully taken out just before the exchange filed for bankruptcy.