The Silicon Valley law firm Fenwick and West has agreed to settle a lawsuit brought by former customers of the collapsed cryptocurrency exchange FTX, marking another major legal development stemming from one of the largest financial scandals in recent history.
According to court filings, Fenwick and the plaintiffs reached a proposed settlement that will be submitted for approval in federal court in Florida. The financial terms of the agreement have not been disclosed, and the firm has not admitted any wrongdoing as part of the resolution.
Claims Linked to FTX’s Historic Collapse
FTX imploded in November 2022 after revelations that billions of dollars in customer funds had been improperly diverted to affiliated trading firm Alameda Research. The sudden collapse triggered criminal prosecutions, regulatory investigations, and extensive civil litigation targeting executives, advisers, and business partners connected to the crypto exchange.
At the center of the fallout was FTX founder and former chief executive Sam Bankman-Fried, who was convicted in 2023 on multiple counts of fraud and conspiracy. He was sentenced in 2024 to 25 years in prison and has since filed an appeal.
The lawsuit against Fenwick was filed by FTX customers who alleged the firm played a critical role in structuring the legal framework that allowed FTX to operate while avoiding meaningful regulatory oversight. Plaintiffs claimed Fenwick’s legal services went beyond traditional advisory work and helped enable practices that concealed risks from customers and regulators.
Fenwick Denies Allegations
Fenwick has consistently denied the accusations, asserting that it provided standard legal services common to many technology and financial startups. The firm has maintained that it was not involved in managing FTX’s operations, handling customer funds, or directing corporate decision-making.
In court filings, Fenwick argued that responsibility for the fraud rests solely with FTX executives and insiders who misused customer assets, not with outside legal advisers. The firm also noted that numerous other law firms, auditors, and consultants worked with FTX during its rise, reflecting the complexity of the exchange’s global operations.
Despite these defenses, Fenwick opted to settle the case, a move that legal experts say reflects the high costs, reputational risks, and prolonged uncertainty associated with complex financial litigation.
Broader Implications for Law Firms and Crypto Clients
The settlement underscores the growing scrutiny faced by professional service providers who advise cryptocurrency companies. As digital asset markets expanded rapidly in recent years, many
law firms took on crypto clients navigating unclear or evolving regulatory environments.
Legal analysts say the Fenwick case highlights the increasing willingness of courts and plaintiffs to examine whether lawyers, accountants, and consultants should bear responsibility when corporate clients collapse amid allegations of fraud.
While settlement does not establish legal liability, it may
influence how law firms assess risk when advising crypto exchanges, blockchain startups, and fintech companies. Firms are now placing greater emphasis on due diligence, compliance reviews, and documentation of advisory boundaries to limit future exposure.
Part of a Wave of FTX-Related Litigation
The case against Fenwick is one of many lawsuits tied to the FTX collapse. Former customers, investors, and creditors have filed claims against banks, venture capital firms, celebrities, and advisers connected to the exchange, seeking to recover losses that collectively reach into the billions of dollars.
FTX’s bankruptcy proceedings continue in Delaware, where estate administrators are working to recover assets for creditors. Meanwhile, regulators including the U.S. Department of Justice and the Securities and Exchange Commission remain focused on enforcing accountability in the crypto sector.
Looking Ahead
The proposed settlement will now be reviewed by a federal judge, who must determine whether it is fair and reasonable for class members. If approved, it would bring closure to Fenwick’s involvement in the litigation but leave unresolved
broader questions about professional liability in the cryptocurrency industry.
As crypto regulation tightens and enforcement actions accelerate, the Fenwick settlement serves as a cautionary reminder that law firms and other advisers are no longer immune from legal fallout when high-risk clients implode. For the legal profession, the case may shape how
future relationships with emerging financial technologies are structured and supervised.
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