It has been reported that a proposed agreement has been reached between the US-based law firm Fenwick & West and FTX users in the lawsuit filed regarding the fraud that occurred before FTX’s bankruptcy. FTX was an exchange founded by Sam Bankman-Fried in 2019, offering primarily crypto asset trading services. Fenwick & West is known as a well-known law firm located in Silicon Valley that provides legal consultancy to the technology sector.
Settlement Process in the Case
Lawyers for both parties stated in a joint statement submitted to the US federal court in Florida that the terms of the agreement were not disclosed and that the proposed agreement would be submitted to the court for approval on February 27. The parties also requested that all proceedings and processes in the case be suspended until the agreement is concluded.
The original lawsuit was filed after FTX users were unable to access assets in their accounts, and multiple lawsuits were initiated against various actors, including former executives, business partners, promoters and professional service providers.
Accusations Against Fenwick & West
The lawsuit, filed by FTX users in 2023 and updated in August, alleged that Fenwick & West helped FTX structure its operations to avoid regulatory obligations and therefore played an important role in the fraud.
“Fenwick’s operating structure, by design and approval, allowed malpractices to continue undetected,” the complaint alleged.
In addition, the company; It was claimed that he had information about the transfer of customer funds between different companies and the blurring of boundaries between FTX and related organizations.
Fenwick & West denied these accusations and argued that it served its customers within the legal framework. The company stated that it had not participated in any crime since the beginning of the case.
“Fenwick & West stated that it does not participate in any unlawful practices and cannot be held responsible for any damage caused to FTX customers.”
In November, the court did not accept Fenwick’s application to dismiss the case, thus paving the way for the users’ claims to be examined.
Latest Developments in the Case and Bankman-Fried’s Statements
Different results were obtained in the lawsuits filed by users against some other external consultants. For example, the lawsuit against FTX’s former attorney, Sullivan & Cromwell, was voluntarily withdrawn due to lack of evidence.
FTX’s founder, Sam Bankman-Fried, claimed in his latest statements that the platform has never gone bankrupt. In a document he shared in September, he argued that the $8 billion deficit did not exist as stated in the records and that customer return rates had reached 143 percent.
Bankman-Fried described the platform’s collapse as a “liquidity crisis” with intense withdrawal requests and claimed that all assets associated with FTX exceeded its liabilities.
