- Fenwick & West accused of enabling the theft of $8 billion in FTX customer funds.
- The law firm is alleged to have designed corporate structures that facilitated fraud.
- Fenwick & West denies wrongdoing and maintains its actions were lawful.
The legal fallout from the dramatic collapse of cryptocurrency exchange FTX has now turned to the law firm Fenwick & West.
Plaintiffs in a sprawling class action filing accuse the Silicon Valley–based firm of being more than a passive observer in the alleged $8 billion fraud that contributed to the downfall of Sam Bankman‑Fried’s empire.
They claim the prestigious firm not only knew about FTX’s misconduct but actively shaped the legal and corporate arrangements that allowed it to occur.
Focus on Fenwick & West
The amended class action, filed Monday, is part of a multi‑district litigation involving more than 130 entities connected to FTX and singles out Fenwick & West as the sole defendant accused of knowingly participating in the fraud.
Plaintiffs say newly surfaced evidence from Bankman‑Fried’s criminal trial and the bankruptcy investigation shows the firm played a “central and indispensable” role in the exchange’s operations.
They argue the massive misappropriation of customer funds at FTX could not have happened without “substantial assistance” from Fenwick.
Court papers claim the firm drafted entities without appropriate safeguards, enabling FTX to reroute billions in customer assets to its sister trading firm, Alameda Research.
Among the most serious allegations is that Fenwick created shell companies, such as North Dimension, to conceal transfers, prepared back‑dated agreements to justify improper movements of funds, and approved intercompany loans secured by customer assets.
Allegations of concealment and obstruction
Prosecutors and bankruptcy officials have accused FTX executives of using disappearing messages on Signal to cover their tracks.
Plaintiffs now allege that Fenwick implemented encrypted messaging policies that allowed those messages to vanish.
The firm is also accused of establishing auto‑deleting chat channels for executives and engaging in other practices that regulators later characterized as obstruction.
Nishad Singh, former FTX director of engineering, testified that he personally told Fenwick about misuse of customer funds and false statements, and that the firm responded not with warnings but with guidance on how to conceal the misconduct.
Similar testimony from former Alameda CEO Caroline Ellison and co‑founder Gary Wang supported the claim that Fenwick was aware of fund diversions used to cover Alameda’s losses.
Examiner findings raise the stakes
An independent bankruptcy examiner reviewed more than 200,000 documents, many of which directly involved Fenwick & West.
The examiner’s report concluded the firm was “deeply entwined” in nearly all aspects of FTX’s misconduct. It described “exceptionally close relationships” between Fenwick lawyers and FTX insiders and presented evidence the firm facilitated conflicted transactions that misused customer assets.
Those findings intensified scrutiny of the firm’s role in bolstering FTX’s credibility with investors.
Plaintiffs assert that Fenwick’s reputation in Silicon Valley helped the exchange raise more than $1.3 billion from venture investors, despite internal awareness of insolvency risks.
The amended complaint also adds state securities law claims in Florida and California, accusing Fenwick of aiding and abetting unregistered sales of FTT tokens and yield accounts.
Fenwick & West denies wrongdoing
Fenwick & West has consistently denied the allegations, insisting that it acted within the scope of legal representation.
In a 2023 motion to dismiss, the firm argued that lawyers cannot be held liable for a client’s alleged wrongdoing where their actions fall within the bounds of professional legal services.
The court has not yet ruled on Fenwick’s most recent motion to dismiss, and the plaintiffs’ request to amend their complaint with new evidence awaits consideration by U.S. District Judge K. Michael Moore in Miami.
As the litigation unfolds, the case is being closely watched by both the legal profession and the cryptocurrency industry.
A ruling against Fenwick & West could set a precedent for lawyer liability in the digital‑asset space and alter how firms approach high‑risk clients.
For FTX’s creditors, the outcome could affect how much, if anything, can be recovered from the ruins of one of the largest financial collapses in modern U.S. history.