The law firm Fenwick & West has denied allegations in an updated class action lawsuit that claims the firm played a central role in the fraud and eventual collapse of the cryptocurrency exchange.

Earlier this month, FTX users requested to update their lawsuit against Fenwick, initially filed in 2023, claiming that new information from bankruptcy and criminal cases provides evidence that the law firm "played a key and significant role in the most important aspects of how and why the FTX fraud occurred."

Fenwick stated in documents submitted to a federal judge in Florida on Monday that the court should reject the FTX users' request to update the lawsuit against the firm, arguing that their theory of the firm assisting the exchange in implementing fraud is "both superficial and flawed."

"Fenwick should not be held liable for assisting and abetting a fraud of which it was completely unaware, based solely on the allegation that Fenwick did what law firms do every day—providing routine and legitimate legal services to clients," the firm stated.

The new allegations against Fenwick stem from a large multi-district class action lawsuit filed by FTX users after the exchange's collapse at the end of 2022.

The group also sued celebrities and companies allegedly associated with FTX, including the law firm Sullivan & Cromwell, which the group later dropped charges against due to a lack of evidence.

Fenwick argued that the proposed updated complaint is "untimely—based on outdated information that has been available to them for years—and misleading and futile."

Fenwick also pointed out that the allegations against the firm "reflect" the claims they once used "quite aggressively" against Sullivan & Cromwell, which were withdrawn after a report concluded that Sullivan was unaware of the FTX fraud.

"They have not provided a credible reason why the same allegations should hold in the case against Fenwick," the firm added.

Fenwick also rebutted claims made by FTX's chief engineer Nishad Singh, who testified in the criminal trial of FTX co-founder Sam Bankman-Fried that Fenwick was aware and helped conceal "misuse of customer funds" and "improper loans."

"Singh testified that Fenwick merely advised on how to structure founder loans, which is a common tool for closely held companies like FTX," the firm stated.

The firm added that "dozens of witnesses" in the Bankman-Fried trial testified that the fraud at FTX was carried out "without the knowledge of even FTX's internal legal counsel, other FTX employees, executives and directors, FTX's long-time accountants, and other external law firms and professionals closely working with FTX." "Fenwick was no exception."

Meanwhile, Fenwick stated that the new allegations in the proposed complaint regarding its assistance in launching and promoting the FTX token (FTT) in violation of Florida and California securities laws are far-fetched, irrelevant, and should have been "brought months or even years ago."

"These new allegations come too late," the firm wrote. "If the plaintiffs truly believed they had state securities law claims against Fenwick, they had every opportunity to raise those claims from the outset."

The firm accused the group of adding these two new allegations only after the judge dismissed all claims against the celebrities accused of promoting FTX, except for the state securities law claims.

"This is an attempt to circumvent the court's ruling on the dismissal motion for the celebrity defendants at the last minute and to recharacterize the lawyers as 'promoters,'" Fenwick claimed. "But this theory also does not hold."

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Original article: “Fenwick denies allegations of playing a key role in the multi-billion dollar FTX fraud case”

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