Fenwick agrees to settle lawsuit over law firm’s alleged role in FTX fraud
FTX users filed the lawsuit in 2023, accusing the law firm of playing “a key and crucial role” in “how the FTX fraud was accomplished.”
FTX users and Fenwick & West have reached a proposed settlement in a 2023 lawsuit alleging that the law firm helped carry out the fraud that led to the crypto exchange’s collapse three years ago.
Fenwick and lawyers representing FTX users said in a joint filing with a Florida federal court on Friday that they plan to submit the proposed settlement to the court for approval on Feb. 27.
The filing did not disclose the specific terms of the settlement, but both parties asked the court to pause all deadlines and pending motions in the class-action lawsuit ahead of the settlement filing.
The FTX users’ lawsuit against Fenwick is part of a multidistrict class-action lawsuit filed after FTX collapsed in late 2022. Users have filed lawsuits against the exchange, celebrities have been accused of promoting it, and multiple companies have worked with it.
The lawsuit, first filed in 2023 and updated in August, accused Fenwick of playing “a key and crucial role in the most important aspects of why and how the FTX fraud was accomplished.”
The users claimed the fraud at FTX “was only possible because Fenwick provided ‘substantial assistance’ by creating and approving the structures that allowed numerous frauds.”
The lawsuit claimed Fenwick advised FTX on how to structure its business to avoid money transmitter registrations and “had visibility into the commingling of funds and blurred boundaries” between FTX and Alameda Research.
Fenwick sought to dismiss the lawsuit, arguing it was “not liable for aiding and abetting a fraud it knew nothing about” and asserted it provided “routine and lawful legal services.”
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The court allowed the FTX users’ amended complaint to proceed in November, denying Fenwick’s motion to dismiss.
Fenwick & West and the Moskowitz Law Firm, which represents FTX users, did not immediately respond to a request for comment.
The FTX users had also sued Sullivan & Cromwell, FTX’s former outside counsel, in February 2024, accusing it of playing a role in FTX’s multibillion-dollar fraud, but voluntarily dismissed the complaint eight months later over a lack of evidence.
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