20 victims have filed a $525m lawsuit against the law firm Fenwick & West
A massive $525 million legal action has been initiated in the US District Court for the District of Columbia against Fenwick & West LLP by a coalition of victims spanning five different jurisdictions. The plaintiffs allege that the prominent Silicon Valley law firm was instrumental in masking the extensive fraud committed by the FTX cryptocurrency exchange before its spectacular collapse.
According to the complaint, the legal counsel provided by the firm created a deceptive veneer of institutional legitimacy that encouraged investors to keep their life savings within the platform. This lawsuit follows the criminal conviction of Sam Bankman-Fried and recent findings from a court-appointed bankruptcy examiner that suggest the firm was deeply embedded in the operations of the exchange.
The specific allegations include the creation of a shell company known as North Dimension Inc., which was used to transfer more than $3 billion in misappropriated customer funds. Testimony from former engineering director Nishad Singh claims that the firm was explicitly warned about the misuse of capital, yet chose to provide strategies for concealment rather than reporting the misconduct.
Furthermore, the complaint highlights the implementation of auto-delete messaging policies on Signal, which federal investigators previously identified as a key tool for evading regulatory oversight. The plaintiffs argue that these actions constitute fraud and gross negligence on the part of the attorneys involved in the daily operations of the exchange.
In addition to the financial claims, the lawsuit seeks the repayment of all legal fees earned by the firm during its tenure with FTX and punitive damages against specific partners. Documentation reveals that the firm scrubbed its website of any mention of FTX shortly after the bankruptcy filing in November 2022.
While the defense is expected to challenge these claims, the bankruptcy examiner concluded that the firm helped draft backdated agreements to cover illicit transfers.
