Fishman Haygood, LLP, an investor fraud litigation boutique law firm, and Stumphauzer Kolaya Nadler & Sloman, PLLC, a boutique full-service litigation firm based in Miami, Fla., announce the filing of a class action lawsuit on behalf of FTX customers in federal court in Miami, where FTX maintained its U.S. headquarters. The lawsuit is the most comprehensive suit to date seeking to recover damages in the form of investment losses against the venture capital firms, banks, accounting firms, and a law firm that, the suit alleges, aided and abetted Samuel Bankman-Fried and FTX in a scheme to defraud customers out of billions of dollars and crypto assets (the “Fraud”).
The suit alleges that some of world’s largest venture capital firms, including Sequoia Capital, SoftBank Group, and Thoma Bravo, learned through due diligence that FTX was a fraudulent scheme, but nevertheless incited the Fraud with billions in necessary capital, provided guidance and other support critical to the Fraud, and publicly promoted Bankman-Fried and FTX to keep the Fraud concealed until FTX could go public or cash out in a private sale. For example, venture capital defendant Sequoia, just six weeks before the collapse, touted FTX as “Goldilocks-perfect” with “no concerted effort to skirt the law.” The suit alleges that, as a direct result of their assistance in furtherance of the Fraud, the venture capital firms saw the value of their stakes in FTX balloon as much as 90% in a matter of months—all at the expense of individual investors.
The suit also alleges that certain banks, including Signature Bank and Silvergate Bank, aided and abetted Bankman-Fried and the Fraud by providing access to the U.S. banking system, which Bankman-Fried struggled to find, as traditional financial institutions refused to bank FTX, and by helping to launder customer funds by transferring those funds out of customer accounts and into accounts that Bankman-Fried separately owned or controlled, including Alameda Research, the main vehicle through which Bankman-Fried operated the Fraud. To further assist with Bankman-Fried’s siphoning of customer funds, the suit alleges, the banks developed state-of-the-art blockchain technologies—Silvergate’s SEN and Signature’s Signet platforms—through which FTX could funnel customer funds through Alameda or other shadowy entities and into Bankman-Fried’s pockets.
The suit alleges that the banks are required, under the Bank Secrecy Act and other regulations, to monitor for suspicious activity, and in fact were aware of these fraudulent transfers (basically the theft of FTX customer funds), but facilitated the transfers anyway, because the banks stood to profit tremendously for as long as the Fraud continued: the FTX accounts dramatically increased their funds on deposit and, with FTX’s accounts, Signature’s stock price skyrocketed from $12 to $200 per share, and Signature joined the S&P 500 for the first time. The suit also alleges that Deltec Bank and Trust, a Bahamian bank with close ties to Bankman-Fried, helped to fence assets from FTX accounts at Silvergate and Signature to Bankman-Fried’s accounts offshore.
Finally, the suit includes as defendants the professional accounting firms Armanino, LLP and Prager Metis CPAs, LLC—the latter of which purports to be the first accounting firm to operate in Facebook’s Metaverse—and law firm Fenwick & West, LLP. For their part, the suit alleges that the accounting firms ran sham audits on FTX’s behalf, signing off on financials for primary FTX entities that the accounting firms knew would be used to entice customers to invest in FTX, because it was one of the only crypto exchanges with an outside auditor’s stamp of approval.
The suit also alleges that, not to be outdone by the other players, Fenwick & West created fake entities that Bankman-Fried and FTX employed as fronts through which to launder customer funds and helped FTX to dodge regulatory scrutiny while maintaining a veneer of full compliance. The suit alleges that, perhaps most egregiously, Fenwick & West helped FTX to establish North Dimension, the counterfeit electronics dealer that held accounts at defendant banks and into which Bankman-Fried directed that customer funds be directly deposited.
The case has been allotted to Judge Jose E. Martinez and is currently being served on defendants. A copy of the suit, which contains a full list of the defendants and comprehensive coverage of defendants’ assistance to the Fraud is available here.
If you would like to learn more about these claims, or have any questions concerning this announcement or your rights or interests with respect to these matters, please contact Hogan Paschal (t: 504.556.5507 or e: firstname.lastname@example.org) and/or Kerry Miller (t: 504.556.5549 or e: email@example.com) of Fishman Haygood. There is no cost or obligation to you. Attorney advertising. Prior results do not guarantee similar outcomes.
About Fishman Haygood, LLP:
Fishman Haygood, LLP is a New Orleans-based law firm that provides innovative solutions to the businesses, people, and places that form the backbone of commerce on the Gulf Coast and beyond. We offer a broad range of services tailored to meet the needs of each and every client, from established, public multinational corporations or new business startups to regional and local businesses. At Fishman Haygood, we believe that no client is too small, no matter too large. For more information about the firm, please visit www.fishmanhaygood.com.
About Stumphauzer Kolaya Nadler & Sloman, PLLC:
Stumphauzer Kolaya Nadler & Sloman, PLLC is a boutique full-service litigation firm based in Miami, Florida, that focuses on civil litigation, government regulatory enforcement matters, white collar criminal litigation, internal investigations, and whistleblower suits. The firm is comprised of former BigLaw partners and high-ranking federal prosecutors, including the former United States Attorney for the Southern District of Florida. Colleagues, clients, and legal observers recognize the firm’s lawyers as experts and leaders in their respective fields of practice. The firm and its lawyers have been recognized in Chambers & Partners, The Best Lawyers in America, Florida Super Lawyers, Florida’s Legal Elite, and U.S. News – Best Lawyers. For more information, visit http://www.sknlaw.com.