A group of customers of the once-prominent cryptocurrency exchange FTX has reportedly filed a lawsuit against the law firm Fenwick & West, insisting that it contributed to the alleged scam orchestrated by Sam Bankman-Fried (SBF) and the subsequent multi-billion losses it brought. 

The former leader of the exchange has pleaded not guilty to the fraud charges against him. He currently lives with his family, awaiting the trial at the beginning of October, which will determine whether he played a role in one of the biggest crashes in the history of crypto.

The Second Such Attack on Fenwick & West

According to a recent Reuters coverage, the complaint filed in the Northern District of California alleges the law company of bypassing regulatory rules and establishing entities that SBF and other former FTX executives employed to commit fraud.

Specifically, those organizations helped the crypto company to misappropriate users’ funds and use them on speculative investments or make political and charitable donations. 

The group of investors described Fenwick & West as the main outside law firm for FTX, maintaining that its attorneys had insight into the exchange’s “convoluted organizational structure, abject lack of internal controls, and dubious business practices.”

Subsequently, Fenwick & West supposedly enabled the marketplace to secure certain regulatory licenses in the USA without applying directly with watchdogs. 

One interesting fact is that Daniel Friedberg (the former leading lawyer of crypto exchange FTX) has previously worked at the sued law firm. Certain reports from the beginning of the year indicated that he cooperated with American prosecutors to shed more light on SBF’s actions while at the helm of the exchange. 

Unfolding the Case One Year After the Catastrophe

The FTX meltdown, which triggered $8 billion in customer losses, is considered one of the darkest events in the history of the cryptocurrency industry. As such, the trial against the former CEO Bankman-Fried is highly anticipated not only by fallen investors but also by broad society.

Multiple authorities and regulators have named SBF the main culprit behind the crash, insisting on a maximum prison sentence. Several coverages have informed that the 31-year-old could face between 115 and 155 years in jail if found guilty on all charges.

On the other hand, he has not admitted any of the crimes and was allowed to live at his parents’ house under a whopping $250 million bond. The mega trial against him is set for October 2, whereas some of his former associates might testify against him.

One example is his ex-girlfriend and former leader of Alameda Research – Caroline Ellison. Not long ago, he shared quoted excerpts of her private diary during an interview with a media outlet. According to the leaked information, Ellison was going through severe problems a few months before the infamous collapse.

The US DOJ insisted that SBF should go to prison since his actions could have intimidated the woman who is expected to take part in the legal case in October. 

The post FTX Clients Sue Law Firm for Aiding SBF’s Alleged Fraud (Report) appeared first on CryptoPotato.

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Filed under: Bitcoin - @ August 10, 2023 6:13 pm