Fenwick & West LLP, the law firm that acted as lead outside counsel to FTX, has agreed to pay $54 million to settle a federal class-action lawsuit brought by former customers of the collapsed exchange. The settlement, announced this week, closes one of the many legal battles stemming from the 2022 implosion of Sam Bankman-Fried’s crypto empire. Neither the firm nor the plaintiffs have commented publicly beyond the court filings.
What the settlement covers
The class action, filed in U.S. District Court, accused Fenwick & West of helping FTX mislead investors and customers through its legal work. The $54 million payout will go to a fund for former FTX users who lost assets when the exchange filed for bankruptcy. The settlement does not include an admission of liability by the law firm. A federal judge still needs to approve the deal before it takes effect.
Fenwick & West's role at FTX
Fenwick & West was one of several law firms that advised FTX on regulatory and corporate matters before the exchange's collapse. The plaintiffs argued that the firm's advice enabled FTX to operate without proper oversight and that it should have flagged red flags in the company's financial structure. The $54 million figure is one of the larger settlements to emerge from the FTX bankruptcy so far, though it pales next to the billions of dollars in customer claims still being sorted out in the bankruptcy court.
The broader legal fallout
FTX's collapse spawned dozens of lawsuits against executives, auditors, and advisers. Bankman-Fried himself was convicted on fraud charges in 2023 and is serving a 25-year prison sentence. Other law firms and service providers, including Sullivan & Cromwell and Silvergate Bank, have also faced litigation, though some have reached settlements or been dismissed. The Fenwick & West settlement is a concrete reminder that professional services firms are not immune to the legal consequences of a client's fraud.
The settlement still requires court approval, with a hearing expected in the coming months. If approved, it will end the class action against Fenwick & West but does not affect the separate bankruptcy proceedings that continue to distribute FTX's recovered assets.
