Fenwick & West agrees to $54M settlement over FTX work

Fenwick & West, one of Silicon Valley’s most established law firms, has agreed to pay $54 million to settle claims that it aided and abetted fraud through its legal work for FTX. The settlement, filed in a Miami federal court, is still subject to judicial approval.

The deal resolves accusations from FTX customers who alleged the firm played a direct role in constructing the corporate architecture that allowed customer funds to be siphoned off and regulatory oversight to be dodged.

What Fenwick allegedly did

The core allegation is striking in its specificity. FTX customers claimed Fenwick & West assisted in creating what they called “shadowy entities” designed to facilitate the misappropriation of client assets and evade regulatory scrutiny.

FTX filed for bankruptcy in November 2022, setting off one of the most spectacular collapses in crypto history. Its founder, Sam Bankman-Fried, was subsequently convicted of fraud and sentenced to prison.

The legal exposure doesn’t end here

This settlement only resolves one set of claims. A separate group of 20 plaintiffs has filed a $525 million lawsuit in Washington D.C. federal court targeting both Fenwick as an institution and several of its individual partners personally.

The D.C. case remains active, meaning Fenwick’s FTX-related legal costs could ultimately climb well beyond the $54 million it’s paying now. If the $525 million suit gains traction, the firm would be staring down combined claims approaching $600 million.

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