TL;DR:
- A group of 20 FTX victims sued law firm Fenwick & West for $525 million, accusing it of covering up the fraud.
- The lawsuit alleges Fenwick created corporate structures to conceal fund movements and configured Signal’s auto-delete message policy.
- Judge Lewis Kaplan rejected Sam Bankman-Fried’s request for a new trial, dismissing his arguments as “conspiratorial.”
A group of 20 victims from five countries filed a lawsuit for $525 million against Fenwick & West LLP, one of Silicon Valley’s most influential law firms, accusing it of having actively facilitated the FTX fraud. The lawsuit was filed in the United States District Court for the District of Columbia and names six attorneys individually as defendants.
The plaintiffs allege that they lost their savings when FTX collapsed in November 2022, and argue that Fenwick’s involvement gave the exchange an appearance of legitimacy that prevented them from withdrawing their funds in time.
The Cover-Up from Within
The core of the lawsuit is the testimony of Nishad Singh, former head of engineering at FTX, who pleaded guilty to fraud charges and testified at the criminal trial against Sam Bankman-Fried. Singh stated that he directly communicated to Fenwick attorneys that client funds were being misused, and that the firm, rather than distancing itself, provided advice on how to conceal it.
The lawsuit also alleges that Fenwick incorporated North Dimension Inc., a shell company in Delaware that posed as an electronics retailer but channeled more than $3 billion in stolen funds. The firm also allegedly implemented the auto-delete message policy on Signal that, according to federal prosecutors, allowed the fraud to remain off the radar of regulators and investigators.
A court-appointed bankruptcy examiner, whose report was published in 2024 after reviewing more than 200,000 documents, concluded that Fenwick was “deeply intertwined in nearly every aspect of the FTX Group’s unlawful conduct.” That same report documented the creation of corporate structures to disguise fund movements and the drafting of backdated agreements to conceal transfers.
Fenwick Removed All FTX-Related References from Its Website
Following FTX’s collapse, Fenwick removed all mentions of the exchange from its website and quietly retained defense attorneys from Gibson Dunn before any civil lawsuit had been filed against it.
The plaintiffs seek compensatory damages exceeding $525 million, the return of all fees charged to FTX, and punitive damages against partners Tyler Newby and Daniel Friedberg for deliberate and reckless professional misconduct.
Separately, Judge Lewis Kaplan last month rejected Bankman-Fried‘s request for a new trial, dismissing his arguments as “conspiratorial and completely contradicted by the record.” Kaplan, who sentenced the former chief executive to 25 years in prison in 2024, noted that the three witnesses cited by the defense had been known to Bankman-Fried long before the trial.
