By Andrew Goudsward
Law firm Fenwick & West has hired its own outside legal team as it faces scrutiny over its role advising now-bankrupt cryptocurrency exchange FTX, including from the company's indicted founder Sam Bankman-Fried.
Silicon Valley-founded Fenwick has turned to Gibson, Dunn & Crutcher as its advice becomes a focus of Bankman-Fried’s criminal defense, according to court documents and sources familiar with the situation.
Nancy Hart and Kevin Rosen, leaders in Gibson Dunn's prominent law firm defense practice, are representing Fenwick on issues related to FTX, including in the Bankman-Fried criminal case and a federal class action lawsuit, sources said.
Spokespersons for Fenwick and Gibson Dunn declined to comment.
Fenwick, known for representing startups and technology clients, was a primary outside law firm advising FTX as it grew into one of the world’s largest cryptocurrency exchanges before imploding in a rapid collapse last November. The firm also counseled Bankman-Fried’s hedge fund Alameda Research, which is at the center of the criminal case against him.
Bankman-Fried is facing fraud, campaign finance and other charges after U.S. prosecutors said he stole billions in FTX customer funds to prop up the fledging Alameda hedge fund. Bankman-Fried has pleaded not guilty and asked a judge to toss much of the indictment against him.
Bankman-Fried has sought a judge’s permission to subpoena documents from Fenwick that he claims will show he received legal advice on issues related to charges in the indictment, including the use of disappearing messaging apps and the need to register one of his entities with regulators.
The documents could bolster Bankman-Fried’s defense by showing that he followed guidance from lawyers on certain issues and did not intend to break the law, Bankman-Fried’s attorneys argued in a court filing.
Prosecutors have opposed the effort, arguing that the proposed subpoena does not identify specific evidence that could be used in court. Fenwick has not weighed in on the request.
Fenwick has also received subpoenas from federal law enforcement, according to a filing by FTX lawyers in its bankruptcy case, which noted that bankruptcy lawyers in January discussed the subpoenas with Fenwick’s general counsel.
The contents of the government subpoenas are not public, but prosecutors have said in court filings that the documents Fenwick turned over do not relate to issues Bankman-Fried has raised in the criminal case.
Fenwick, one of at least four major law firms to advise FTX, is not the only firm to be targeted by Bankman-Fried. The one-time crypto billionaire has publicly clashed with New York firm Sullivan & Cromwell for its role steering the exchange into bankruptcy.
Fenwick is also named in a proposed class action lawsuit brought by an FTX customer alleging the firm helped set up entities Bankman-Fried used to commit fraud and advised on transactions that allowed FTX to skirt regulatory scrutiny.
Fenwick has not yet responded to the complaint. The case was transferred on Wednesday to a federal judge in Florida overseeing other lawsuits tied to the FTX collapse.
(Reporting by Andrew Goudsward)