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Former outside counsel for FTX contests accusations of complicity in fraud

In a recent legal document submission, a prominent United States law firm, which had previously provided its services to the cryptocurrency exchange FTX, has staunchly refuted allegations of involvement in aiding Sam Bankman-Fried in his purportedly illicit undertakings.

A law firm, previously engaged in delivering its legal expertise to the now-defunct cryptocurrency platform, FTX, has strongly rebuffed claims asserted in a class-action lawsuit. The lawsuit alleges that this law firm played a role in the exchange’s alleged deceptive activities.

As per a court filing made on September 21st, Fenwick & West, a law firm headquartered in the United States, has categorically denied all allegations of wrongdoing in connection with its provision of legal counsel during FTX’s operations. The document highlights a fundamental legal principle: an attorney cannot be held accountable for any conspiracy or abetting of a client’s wrongful actions, as long as their conduct remains within the bounds of the client’s legal representation.

The plaintiffs contend that while Fenwick provided standard legal services adhering to the law, Sam Bankman-Fried supposedly exploited this advice to further his deceptive activities.

Furthermore, the submission claims that certain employees of Fenwick made a voluntary decision to leave the firm and join FTX. Additionally, it reiterated that Fenwick contributed to the establishment of companies utilized by Bankman-Fried in his fraudulent activities and provided FTX with guidance on adhering to regulatory standards within the ever-evolving cryptocurrency landscape.

However, Fenwick argues that it should not bear full responsibility, as it was not the sole legal entity representing FTX. They assert that their role in offering diverse legal advice to the insolvent exchange was relatively minor.

“If the plaintiffs’ allegations were sufficient to establish a claim against Fenwick for conspiracy and aiding and abetting, it would set a precedent where any attorney could be brought to court and held accountable for their client’s misconduct. That is not in accordance with the law.”

This development follows a legal dispute initiated by FTX debtors against former employees of Salameda, a Hong Kong-incorporated company formerly associated with the FTX group. FTX alleges that $157.3 million was unlawfully withdrawn shortly before the exchange’s declaration of bankruptcy.

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