FTX’s former external legal team disputes involvement in fraud allegations
A law firm that previously provided services to the now-defunct cryptocurrency exchange FTX has refuted a class-action lawsuit brought against them claiming that it assisted in the exchange’s alleged fraudulent activities.
According to a Sept. 21 court filing, Fenwick & West, a United States law firm, denies all accusations of misconduct related to the provision of legal services during FTX operations:
“It is black-letter law that an attorney cannot be held liable for conspiracy or aiding and abetting a client’s wrong “‘as long as [his] conduct falls within the scope of the representation of the client.’”
The plaintiffs contend that while Fenwick provided regular legal services within the bounds of the law, Sam Bankman-Fried allegedly misused the advice to advance his fraudulent activities.
They further argued that Fenwick exceeded the norm in its service offerings to FTX.
“Plaintiffs allege that Fenwick can nevertheless be held liable because Fenwick purportedly “provided services to the FTX Group entities that went well beyond those a law firm should and usually does provide,” the filing noted.
Related: Crypto’s Lehman moment: Investors buy $250M of FTX claims — Report
It was further claimed that employees of Fenwick chose to depart from the firm and join FTX voluntarily.
Additionally, the filing reiterated that Fenwick assisted in establishing corporations used by Bankman-Fried in his fraud, and advised FTX on regulatory compliance in the evolving crypto landscape.
However, Fenwick argued that it should not bear liability, as it was not the sole law firm representing FTX. It asserts that it played a relatively minor role in providing various aspects of legal advice to the bankrupt exchange.
“If Plaintiffs’ allegations were sufficient to state a claim against Fenwick for conspiracy and aiding and-abetting liability, then any lawyer could be hauled into court and forced to answer for his client’s misconduct. That is not the law.”
This comes after the FTX debtors filed a lawsuit against former employees of the Hong Kong-incorporated company Salameda, which was previously affiliated with the FTX group.
FTX initiated legal action to reclaim $157.3 million, alleging that the funds were illicitly withdrawn shortly before the exchange’s bankruptcy filing.
Magazine: Deposit risk: What do crypto exchanges really do with your money?
Kemi Badenoch will promise to introduce a “golden rule” to get the deficit down and “get our economy back on track” if the Tories win the next election.
During her keynote speech at the end of the Conservative Party’s conference on Wednesday, the Tory leader will say her party is the only party “who can be trusted to meet the test of our generation”.
Follow live updates from Tory conference
“We are the only party with a plan to get our economy back on trust,” she is expected to say.
Ms Badenoch will tell Tory members she would introduce a “golden economic rule” to ensure for every pound saved, half or more will go to reduce the deficit and half will go towards tax cuts or spending to boost the economy.
She will accuse Chancellor Rachel Reeves of doubling the deficit “with her borrowing and tax doom loop” over the next decade.
“It’s not sustainable, and it’s not fair,” she will say.
“It is stealing from our children and grandchildren, and Conservatives will put a stop to it.”
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Why Kemi Badenoch ‘lacked confidence’
Where will the cuts fall?
Ms Badenoch will say the Tories have already identified £47bn in savings, including £23bn from welfare, £8bn from the civil service and £7bn from the overseas aid budget.
She will also announce plans to reform the higher education sector, double apprenticeship funding, and back high-value courses for young people.
She will pledge to end “debt trap” degrees, which she will say offer poor value to students and taxpayers, and instead fund “worthwhile courses”.
This will lead to savings, she will say, to pay for the doubling of apprenticeship funding, in addition to the employers’ apprenticeship levy funds currently paid by UK employers with a payroll of more than £3m.
“This can’t be right – young people in Britain deserve a better deal, which is why the Conservatives are throwing out the status quo,” she is expected to say.
Read more:
Twenty Tory councillors defect to Reform
Beth Rigby on tough questions facing Badenoch
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Empty seats at Tory party conference
The plan would see more apprenticeships for people aged 18-21, while any remaining funding would be used to support “high-quality” courses at research-intensive British universities.
The Conservative Party’s conference has been marred by a lacklustre attendance, the defection of 20 Tory councillors to Reform, and a Sky News/YouGov poll which found half of the party’s members think Ms Badenoch should not lead the party into the next election.
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Politics
Tetchy Badenoch criticised me for asking hard questions – but leadership challenge talk won’t go away
In the 11 months since Kemi Badenoch has become party leader, the Conservative Party has dropped from 26% to 17% in the polls.
It has lost nearly 700 council seats, 16 councils, while 18 senior Tories have defected, including one of the party’s great thinkers, Danny Kruger.
Politics Live: Tory councillors defect to Reform
Her personal poll rating, minus 47, is worse than the lowest ebb of Iain Duncan Smith’s fated leadership and worse than when Boris Johnson resigned.
To rub salt into the wounds, a Sky News/YouGov poll this week found that the majority of Tory members think Robert Jenrick should be the leader, while half don’t think she should lead them into the next general election.
Being leader of the Opposition is often described as the hardest job in politics, but for Badenoch, with Reform stealing the march as the party of the right, it looks pretty much impossible.
For someone who needs to try to win people over, Badenoch has a curious style. She likes to be known as a leader who isn’t afraid of a fight and, at times, she approached our interview at the Conservative Party conference as if she was positively looking for one.
A few times in our interview when I asked her a question she didn’t like, or didn’t want to answer (it is my job to ask all politicians hard questions), she seemed tetchy.
And when I deigned to ask her whether she admired Nigel Farage, she criticised me for asking the question. She asked why I was not asking her if I admire Sir Keir Starmer or Sir Ed Davey.
Her approach surprised me, as I had asked the prime minister exactly the same question a week before. He’d answered it directly, without arguing over why I had asked it: “I think he is a formidable politician,” said Sir Keir.
Badenoch told me she didn’t understand the question, and then told me she wasn’t interested in talking about him. It made for an awkward, ill-tempered exchange.
The facts remain that Farage is topping the polls, helped by Labour’s collapsing support and the Conservatives’ deep unpopularity.
And in the run-up to our interview, Reform drip-fed the news that 20 Tory councillors were defecting to Farage’s party.
There is open talk in Badenoch’s party about whether the Tories will need to try to come to some sort of agreement with Reform at the next election to try to see off Labour and ‘progressive parties’.
Farage says absolutely not, as does Badenoch – but many in her party do not think she has that luxury.
Andrew Rosindell, MP for Romford, told GB News he’ll lose his seat unless the two sides “work together” and said the right must unite to defeat the left. Arch-rival Robert Jenrick pointedly refuses to rule it out, saying only it’s “not the priority”. Meanwhile, party members support an electoral pact by two to one, according to our Sky News poll.
On the matter of whether these MPs, and party members, have a point, Badenoch bristled: “It is important that people know what we stand for. Robert Jenrick is not the leader of the Conservative Party, neither is Andrew Rossindell. I am the leader of the party and we are not having a coalition or a pact with Reform.”
Read More:
Jaunty Jenrick: a leader’s speech in all but name
Kemi Badenoch praises Thatcher but faces fight with grandees
When I ask colleagues if they think Badenoch is too aloof, too argumentative, too abrasive to lead this rebuild, the popular refrain for her supporters is that she is “a work in progress” and that it would be madness to change the leader again.
The question is, will she be given the time to develop? The plot to oust her is active and much of the chatter around this conference is whether she might be challenged before or after the May local elections.
There are some colleagues who believe it is better to give her more time to turn things around and, if May is truly dreadful and the party goes further backwards, remove her then.
Ahead of conference, when asked by Tim Shipman of the Spectator whether she would resign if the Conservatives go backwards in May, she said rather cryptically “ask me after the locals”.
When I asked Badenoch why she said that she replied, “let’s see what the election result is about”.
When I explained that it sounded rather like she might throw in the towel after next May and so was seeking clarification, she told me that I was asking irrelevant questions.
“Your viewers want to know how their lives are going to be better. Not be inside the Westminster bubble politics of who’s up, who’s down… It’s part of the reason why the country is in this mess. Perhaps if people had scrutinised Labour’s policies instead of looking at just poll ratings, they would be running the country better.”
But Tories are looking at poll ratings and there is a view from some in the party that if the Tories wait until another drubbing in the May local, Scottish and Welsh elections, there might not be much of a party apparatus left to rebuild from.
More than half of Tory members want pact with Reform
In short, there is not a settled view on when a challenge might come, but with the party in the position it is in, talk of a challenge will not go away.
Badenoch wants to make the case that her “authentic conservatism” is worth sticking with and that the policies the Conservatives are announcing will give them a pathway back.
On borders, the Tories are trying to neutralise Reform with a very similar offer. On the economy and welfare cuts, they hope they can beat Labour and Reform.
But really, the question about this party and this leader is about relevance. The prime minister didn’t even bother to name check Badenoch in his conference speech, while Davey trained his guns on Farage rather than his traditional Tory rival.
Badenoch may not like being asked about Reform, might – in her words – not be interested in Reform, but her former voters, and the country, are. The enormous challenge for her in the coming months is to see if she can get them to look at her.
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