In a new legal development, FTX customers claim that law firm Fenwick & West was a “key” player in the multi-billion-dollar fraud, alleging that the Silicon Valley firm was intertwined in many aspects of the crypto exchange’s operations.
This is the first substantive amendment to the FTX Law Firm Track complaint. In the nearly two years that have transpired since Plaintiffs filed this MDL, much has transpired outside of this litigation that highlights that Plaintiffs’ claims here are meritorious, and they could even be considered “prevailing parties” at this stage. Rather than press forward with the original Complaint filed two years ago, Plaintiffs seek to streamline issues in this MDL: Law Firm Track. This MDL Track will now proceed with just one Defendant, Fenwick & West.
In the proposed amended complaint, the crypto exchange’s customers requested that the Court enter an order granting leave to amend their complaint to address these new facts and deny the Motion to Dismiss as moot.
According to the filing, the firm had “actual knowledge” of the crypto exchange’s fraud and provided “substantial assistance.” Additionally, Fenwick, in violation of federal racketeering laws, allegedly served as an “essential member” of the FTX enterprises and promoted the sale of “unregistered securities,” in violation of the Florida (FSIPA) and California Laws (CSL).
The FTX Fraud was only possible because Fenwick provided “substantial assistance” by creating and approving the structures that allowed numerous frauds, including the theft of hundreds of millions of dollars in “loans” by convicted FTX Insiders from the injured class, and Fenwick agreed to create, managed and represented clearly conflicted companies (such as Alameda Research, FTX, North Dimension, etc.), which purposefully had no safeguards to prevent the billions of dollars that were admittedly stolen.
Ultimately, the amended complaint alleges that at best, Fenwick committed professional negligence that directly caused billions of dollars in damages, and at worst was a “key and crucial” player in the crypto exchange’s fraud.
