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New Filing Claims Legal Firm Enabled Exchange Collapse
FTX customers filed an amended lawsuit on August 11 against law firm Fenwick & West, alleging the firm played a crucial role in enabling the exchange’s fraudulent activities. The filing uses evidence from Sam Bankman-Fried’s criminal trial and FTX’s bankruptcy proceedings to support their claims.
Customers argue that FTX’s collapse resulted not only from internal misconduct but also from legal structures that Fenwick created and approved. They claim the law firm provided “substantial assistance” in designing corporate arrangements that allowed billions in customer funds to be diverted.
Allegations Include Conflict of Interest and Cover-Up
The lawsuit accuses Fenwick of representing conflicted FTX-related entities, including trading firm Alameda Research and subsidiary North Dimension, without proper safeguards to prevent asset misuse.
Former FTX executives Nishad Singh, Gary Wang, and Caroline Ellison reportedly testified that Fenwick knew about improper loans, false statements, and customer fund misuse. Singh allegedly told the court that Fenwick advised on how to hide these activities when informed of them.
Independent Examiner Findings Support Claims
An independent bankruptcy examiner reviewed over 200,000 documents and concluded that Fenwick had “exceptionally close relationships” with FTX leadership. The examiner found the firm was “deeply intertwined” in most aspects of the wrongdoing.
The examiner accused Fenwick of creating shell entities to mask asset transfers and setting up auto-deleting Signal chats used by FTX executives. These practices were later cited by regulators and prosecutors as obstruction.
Securities Law Violations Added to Case
The amended filing introduces new claims under Florida and California securities laws. Customers allege Fenwick played an active role in designing and facilitating sales of unregistered securities, including FTT tokens and other FTX-controlled instruments.
Fenwick previously argued in court that it cannot be blamed for client actions when its work fell within normal representation limits. The firm denied all claims in the original filing and maintains its legal work was appropriate.
