Image Credit: Unsplash
A group of 20 FTX customers has sued Fenwick & West LLP for more than $525 million, accusing the Silicon Valley law firm of helping conceal fraud at the collapsed crypto exchange. Fenwick has denied wrongdoing in related FTX litigation and has said it provided legitimate legal services.
The new complaint was filed Wednesday in the U.S. District Court for the District of Columbia and also names six individual defendants. The plaintiffs are from five countries or jurisdictions and say they suffered losses when FTX imploded in 2022.
Plaintiffs Seek More Than $525M From Fenwick
The lawsuit alleges that Fenwick went beyond ordinary outside counsel and helped create structures that hid the misuse of customer funds. Reports on the complaint say the claims include malpractice, fraud and gross negligence.
The plaintiffs are seeking more than $525 million in compensatory damages, along with legal fees and punitive damages against Tyler Newby and Daniel Friedberg. The plaintiffs also claim Fenwick’s involvement gave FTX a false appearance of legitimacy, discouraging customers from withdrawing funds before the exchange collapsed.
Singh Testimony Supports Customer Allegations
The complaint relies in part on former FTX engineering director Nishad Singh, who pleaded guilty and later testified in Sam Bankman-Fried’s criminal trial.
According to reports summarizing the complaint, the plaintiffs allege Singh’s account shows Fenwick attorneys were told customer funds were being misused and still helped support structures that obscured what was happening inside FTX and Alameda Research.
The complaint also reportedly accuses the firm of helping create North Dimension, a shell entity allegedly used in FTX’s banking setup to receive customer funds. Those claims are allegations, not findings of liability.
February Settlement Preceded New FTX Lawsuit
The new case comes months after Fenwick agreed to settle a separate lawsuit brought by FTX customers over its work for the exchange. In that earlier case, Fenwick denied wrongdoing and said it provided routine and lawful legal services.
A 2024 bankruptcy examiner report also scrutinized Fenwick’s work for FTX, including matters tied to founder loans, Alameda-related structures and exchange-linked transactions. The new D.C. lawsuit adds another legal front for Fenwick as FTX customers continue trying to recover losses from the exchange’s collapse.
Categories:
Fhumulani Lukoto
Cryptocurrency Journalist
Fhumulani Lukoto holds a Bachelors Degree in Journalism enabling her to become the writer she is today. Her passion for cryptocurrency and bitcoin started in 2021 when she began producing content in the space. A naturally inquisitive person, she dove head first into all things crypto to gain the huge wealth of knowledge she has today. Based out of Gauteng, South Africa, Fhumulani is a core member of the content team at Coin Insider.