Fenwick & West, a law firm with a storied history of representing Silicon Valley giants, has taken its first public step to counter allegations regarding its involvement with the beleaguered cryptocurrency exchange FTX. The firm filed a motion to dismiss a lawsuit that accuses it of aiding and abetting FTX’s alleged fraudulent activities. Fenwick’s legal team, led by Gibson Dunn partner Kevin Rosen, argues that their work for FTX was nothing more than “routine” legal services.
The core of the allegations
FTX customers have accused Fenwick & West of facilitating the hiding of millions of dollars in funds allegedly stolen from them. The plaintiffs claim that the law firm should be held liable because FTX co-founder Sam Bankman-Fried used the legal services provided to further his alleged fraudulent schemes. However, Fenwick’s motion dismisses this theory of liability as one that “strikes at the heart of the legal profession,” a stance other courts have supported.
Moreover, the motion outlines that Fenwick’s services can be distilled into “three basic acts”: employing lawyers who later joined FTX, forming corporations used by Bankman-Fried for alleged fraud, and advising FTX on regulatory compliance related to crypto trading. Additionally, the firm emphasized that a lawyer’s representation of a client doesn’t grant them omniscience regarding the client’s internal operations.
The larger context: Third Parties under scrutiny
Fenwick & West is not alone in facing legal repercussions from FTX’s downfall. Several high-profile celebrities who once served as FTX marketers, including Tom Brady and Stephen Curry, have also filed motions to dismiss litigation against them. These celebrities argue that the plaintiffs have not provided any facts to support their involvement in FTX’s alleged fraudulent activities.
In a separate but related note, Fenwick has been under the spotlight from multiple quarters this year. Federal prosecutors have issued subpoenas to the firm, and Bankman-Fried has sought to access these subpoenaed documents for his upcoming criminal trial. However, a New York federal judge denied his request, labeling it an overbroad “fishing expedition.”
Significantly, Fenwick & West has a long history of representing respected Silicon Valley companies like Apple, Oracle, and Facebook. The firm argues that the plaintiffs are attempting to hold them liable for the collapse of FTX without any basis in fact or law. This case, therefore, not only impacts Fenwick & West but also sets a precedent for how third parties, including law firms and celebrity endorsers, may be held accountable in cases involving cryptocurrency fraud.