FTX’s former law firm hit with lawsuit alleging it set up ‘shadowy entities’
FTX’s former primary counsel Fenwick & West LLP has been hit with a class action suit claiming it aided the crypto exchange’s alleged multi-billion dollar fraud.
An Aug. 7 filing by a group of FTX customers in a California District Court alleged the law firm set up several “shadowy entities” allowing FTX co-founder Sam Bankman-Fried and other executives to adopt “creative but illegal strategies” to perpetuate fraud.
The suit claims Fenwick & West provided services to FTX that “went well beyond those a law firm should and usually does provide” such as structuring acquisitions by FTX US in ways that circumvented regulatory scrutiny and supplying staff to execute strategies the law firm proposed.
The “shadowy entities” were named as North Dimension and North Wireless Dimension which the suit alleged siphoned misappropriated FTX customer funds.
The plaintiffs said Fenwick & West aided and abetted FTX’s alleged fraud by choosing not to intervene in a series of misrepresentations supposedly made by FTX to its customers.
There was an implied agreement between FTX US, other FTX affiliates and Fenwick & West to deceive customers, the class suit said — something which appealed to the law firm because it “stood to gain financially” from FTX’s alleged misconduct, it added.
Bankman-Fried, former Alameda Research CEO Caroline Ellison, former FTX co-founder Gary Wang and former FTX engineering lead Nishad Singh were the four so-called FTX insiders listed by the plaintiffs.
Fenwick & West was named in a similar class suit in February that also alleged it assisted Bankman-Fried and FTX in setting up its business.
The February class action — which also targeted FTX investor and venture capital firm Sequoia Capital — claimed the services provided by Fenwick & West were central to Bankman-Fried’s fraud.
The law firm recently hired peer firm Gibson Dunn to assist with legal matters related to its alleged role at FTX according to a June 21 Reuters report.
Related: Prosecutors will still consider Sam Bankman-Fried’s alleged campaign finance scheme at trial
FTX collapsed and filed for bankruptcy in November 2022 when it was unable to process a large volume of customerwithdrawals.
Bankman Fried remains under house arrest and faces 12 charges including wire fraud, conspiracy and money laundering. He is set to have two criminal trials in October and March.
Prosecutors said on Aug. 8 that they plan to re-add a charge relating to illegal campaign finance which was previously dropped due it potentially violating a treaty obligation with The Bahamas.
Cointelegraph contacted Fenwick & West for comment but did not immediately receive a response.
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Satoshi Nakamoto, the pseudonymous creator of Bitcoin, marks their 50th birthday amid a year of rising institutional and geopolitical adoption of the world’s first cryptocurrency.
The identity of Nakamoto remains one of the biggest mysteries in crypto, with speculation ranging from cryptographers like Adam Back and Nick Szabo to broader theories involving government intelligence agencies.
While Nakamoto’s identity remains anonymous, the Bitcoin (BTC) creator is believed to have turned 50 on April 5 based on details shared in the past.
According to archived data from his P2P Foundation profile, Nakamoto once claimed to be a 37-year-old man living in Japan and listed his birthdate as April 5, 1975.
Source: Web.archive.org
Nakamoto’s anonymity has played a vital role in maintaining the decentralized nature of the Bitcoin network, which has no central authority or leadership.
The Bitcoin wallet associated with Nakamoto, which holds over 1 million BTC, has laid dormant for more than 16 years despite BTC rising from $0 to an all-time high above $109,000 in January.
Satoshi Nakamoto statue in Lugano, Switzerland. Source: Cointelegraph
Nakamoto’s 50th birthday comes nearly a month after US President Donald Trump signed an executive order creating a Strategic Bitcoin Reserve and a Digital Asset Stockpile, marking the first major step toward integrating Bitcoin into the US financial system.
Related: Bitcoin at 16: From experiment to trillion-dollar asset
Nakamoto’s legacy: a “cornerstone of economic sovereignty”
“At 50, Nakamoto’s legacy is no longer just code; it’s a cornerstone of economic sovereignty,” according to Anndy Lian, author and intergovernmental blockchain expert.
“Bitcoin’s reserve status signals trust in its scarcity and resilience,” Lian told Cointelegraph, adding:
“What’s fascinating is the timing. Fifty feels symbolic — half a century of life, mirrored by Bitcoin’s journey from a white paper to a trillion-dollar asset. Nakamoto’s vision of trustless, peer-to-peer money has outgrown its cypherpunk roots, entering the halls of power.”
However, lingering questions about Nakamoto remain unanswered, including whether they still hold the keys to their wallet, which is “a fortune now tied to US policy,” Lian said.
Related: Bitcoin’s next catalyst: End of $36T US debt ceiling suspension
Is Satoshi Nakamoto wealthier than Bill Gates?
In February, Arkham Intelligence published findings that attribute 1.096 million BTC — then valued at more than $108 billion — to Nakamoto. That would place him above Microsoft co-founder Bill Gates on the global wealth rankings, according to data shared by Coinbase director Conor Grogan.
Satoshi’s new addresses. Source: Conor Grogan
If accurate, this would make Nakamoto the world’s 16th richest person.
Despite the growing interest in Nakamoto’s identity and holdings, his early decision to remain anonymous and inactive has helped preserve Bitcoin’s decentralized ethos — a principle that continues to define the cryptocurrency to this day.
Magazine: 10 crypto theories that missed as badly as ‘Peter Todd is Satoshi’
The United States stock market lost more in value over the April 4 trading day than the entire cryptocurrency market is worth, as fears over US President Donald Trump’s tariffs continue to ramp up.
On April 4, the US stock market lost $3.25 trillion — around $570 billion more than the entire crypto market’s $2.68 trillion valuation at the time of publication.
Nasdaq 100 is now “in a bear market”
Among the Magnificent-7 stocks, Tesla (TSLA) led the losses on the day with a 10.42% drop, followed by Nvidia (NVDA) down 7.36% and Apple (AAPL) falling 7.29%, according to TradingView data.
The significant decline across the board signals that the Nasdaq 100 is now “in a bear market” after falling 6% across the trading day, trading resource account The Kobeissi Letter said in an April 4 X post. This is the largest daily decline since March 16, 2020.
“US stocks have now erased a massive -$11 TRILLION since February 19 with recession odds ABOVE 60%,” it added. The Kobessi Letter said Trump’s April 2 tariff announcement was “historic” and if the tariffs continue, a recession will be “impossible to avoid.”
Source: Anthony Scaramucci
On April 2, Trump signed an executive order establishing reciprocal tariffs on trading partners and a 10% baseline tariff on all imports from all countries.
Trump said the reciprocal tariffs will be roughly half the rate US trading partners impose on American goods.
Related: Bitcoin bulls defend $80K support as ‘World War 3 of trade wars’ crushes US stocks
Meanwhile, the crypto industry has pointed out that while the stock market continues to decline, Bitcoin (BTC) remains stronger than most expected.
Crypto trader Plan Markus pointed out in an April 4 X post that while the entire stock market “is tanking,” Bitcoin is holding.
Source: Jeff Dorman
Even some crypto skeptics have pointed out the contrast between Bitcoin’s performance and the US stock market during the recent period of macro uncertainty.
Stock market commentator Dividend Hero told his 203,200 X followers that he has “hated on Bitcoin in the past, but seeing it not tank while the stock market does is very interesting to me.”
Meanwhile, technical trader Urkel said Bitcoin “doesn’t appear to care one bit about tariff wars and markets tanking.” Bitcoin is trading at $83,749 at the time of publication, down 0.16% over the past seven days, according to CoinMarketCap data.
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