Twenty people who lost money in the FTX implosion are taking the law firm Fenwick & West to court. The $525 million federal lawsuit, filed in the US District Court for the District of Columbia, accuses the firm of helping Sam Bankman-Fried and his associates steal customer funds on a massive scale. The case leans heavily on a court-appointed bankruptcy examiner's finding that Fenwick was 'deeply intertwined in nearly every aspect of FTX Group’s wrongdoing.'
Examiner's damning conclusion
The bankruptcy examiner didn't mince words. Fenwick & West, the report said, wasn't just a passive outside counsel – it was woven into the fraud itself. The firm's attorneys created corporate structures for FTX and Alameda Research, the trading arm at the center of the scandal. They formed shell entities designed to hide money movements and drafted backdated agreements meant to cover up illicit transfers. The lawsuit says that work made the scheme possible.
Shell company posed as electronics retailer
One of the entities Fenwick set up was North Dimension Inc., a Delaware shell company that pretended to be an electronics retailer. According to the complaint, more than $3 billion in stolen customer funds flowed through that front. The firm's lawyers allegedly knew what was happening and helped keep the fiction alive.
Auto-delete messages and a whistleblower ignored
Fenwick also implemented FTX's auto-delete messaging policy on the Signal app. Federal prosecutors have said that policy helped the fraud go undetected for years. More directly, the lawsuit points to former FTX Director of Engineering Nishad Singh, who pleaded guilty and testified against Bankman-Fried. Singh, the suit claims, told Fenwick attorneys directly that customer money was being misused. Instead of stopping it, the firm allegedly advised on how to conceal the theft.
Law firm's post-collapse cleanup
After FTX filed for bankruptcy, Fenwick scrubbed all references to the exchange from its website. The firm also retained defense lawyers from Gibson Dunn before any civil lawsuit had even been filed. The plaintiffs see that as a sign the firm knew it was in trouble.
What the lawsuit seeks
The victims are bringing seven claims – malpractice, fraud, gross negligence, and others. They want compensatory damages above $525 million, the return of every dollar Fenwick collected in legal fees from FTX, and punitive damages against named partners Tyler Newby and Daniel Friedberg. Separately, Sam Bankman-Fried's bid for a new trial was rejected by a federal judge, who called his arguments 'wildly conspiratorial and entirely contradicted by the record.' The case against Fenwick is in its early stages, with no trial date set yet.
