Charges

Criminal Drains 95 Year-Old Woman’s Bank of America Account – Now Bank Wants $4,237 in Overdraft Fees

December 9, 2023 The Daily Hodl

FTX’s former law firm hit with lawsuit alleging it set up shadowy entities

August 9, 2023 Coin Telegraph

The suit claims “shadowy entities” set up by Fenwick & West were allegedly used by FTX and former top executives to misappropriate customer funds.

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.

*Highlighted excerpt from the class complaint against Fenwick & West. Source: CourtListener*

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 that 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-action lawsuit in February that also alleged it assisted Bankman-Fried and FTX in setting up its business.

The February lawsuit — 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.

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 to it potentially violating a treaty obligation with the Bahamas.

Cointelegraph contacted Fenwick & West for comment but did not immediately receive a response.

Magazine: Deposit risk: What do crypto exchanges really do with your money?

Some SBF charges will be dropped if Bahamas objects, U.S. prosecutors say

May 30, 2023 Coin Telegraph

Charges

The charges relating to Sam Bankman-Fried's alleged bank fraud, operating an unlicensed money transmitter service and bribing Chinese officials may be dropped.

United States prosecutors will drop some of the charges against former FTX CEO Sam-Bankman Fried if The Bahamas government objects to them, according to a document filed on May 29 in the U.S. District Court for the Southern District of New York.

And the charges against Sam Bankman-Fried are beginning to disappear… h/t @DecentFiJC pic.twitter.com/JEIF0uR31i
— @amuse (@amuse) May 30, 2023

The document was filed in response to a May 8 defense motion that had attempted to dismiss some of Bankman-Fried’s charges. The defense had argued on May 8 that four of the charges, including ones related to bribing Chinese officials and violating campaign finance laws, were not in the original indictment that had been the basis for Bankman-Fried’s extradition. Therefore, they concluded thta these extra charges violated the extradition treaty between the U.S. and The Bahamas and should be dismissed.

In the new response, prosecutors argued that the treaty does not prevent the U.S. from charging a defendant with additional crimes after extradition, as long as they are not “detained, tried, or punished” for these additional crimes without the consent of the extraditing country. Prosecutors said they are currently seeking a specialty waiver from The Bahamas that would allow them to try Bankman-Fried for three of the four charges the defense objected to. However, these charges will not be levied against him if The Bahamas does not grant the waiver:

“The Government will proceed on the new charges in the S5 Indictment if The Bahamas consents to trial on these charges, and will not proceed on those counts if The Bahamas denies the Government’s request.”

The three charges that require a waiver from The Bahamas include Conspiracy to Commit Bank Fraud (Count 9), Conspiracy to Operate an Unlicensed Money Transmitting Business (Count 10), and Conspiracy to Violate the Foreign Corrupt Practices Act (Count 13).

As for the remaining charge of making illegal campaign contributions, prosecutors said it was listed in the original indictment and diplomatic note that Bankman-Fried agreed to be extradited on and does not require a waiver.

In the May 8 defense motion, attorneys for Bankman-Fried argued that the campaign finance charge was not listed on the surrender warrant “Schedule of Charges” agreed to by the defendant. Prosecutors responded in the new document by claiming that this charge was in the diplomatic note, which they say Bankman-Fried agreed to be extradited on in open court. Therefore, in their opinion, the charge should not be dismissed.

Prosecutors also argued that Bankman-Fried lacks standing to challenge any of these charges as a treaty violation, as they claim that only The Bahamas government has standing to challenge them.

A hearing on the motion to dismiss is scheduled for June 15.

Sam Bankman-Fried is the founder and former CEO of crypto exchange FTX. The exchange suffered a liquidity crisis in November, leading to its bankruptcy shortly thereafter. It is estimated to owe creditors over $3 billion.

Caroline Ellison, former CEO of sister company Alameda Research, and FTX co-founder Gary Wang have both pleaded guilty to fraud charges in connection with the exchange’s collapse. However, Bankman-Fried has claimed that the collapse was caused by management mistakes and not fraud.