Fenwick & West Pays $54M to Settle FTX Fraud Claims: What’s Next?

by

Silicon Valley Law Firm Fenwick & West Settles FTX Fraud Claims for $54 Million

Fenwick & West, a law firm in Silicon Valley that represented the now-bankrupt cryptocurrency exchange FTX, has agreed to pay $54 million to resolve a class-action lawsuit brought by former FTX customers.

  • Key Takeaways:

  • Fenwick & West agreed to pay $54 million to settle FTX customer claims, pending approval by Judge K. Michael Moore.
  • The deal brings combined professional services payouts tied to the FTX collapse to roughly $66 million.
  • A separate $525 million lawsuit filed in May 2026 in D.C. by 20 FTX victims names Fenwick and several of its partners.

Lawfirm Cuts $54M Deal With FTX Customers After Lead Counsel Allegations

The proposed settlement was filed this week in the Southern District of Florida and requires final approval from U.S. District Judge K. Michael Moore. The agreement does not admit wrongdoing by the firm.

Plaintiffs alleged Fenwick went well beyond standard legal advice, claiming the firm helped craft strategies that enabled FTX to commingle customer funds with those of Alameda Research, the affiliated trading firm controlled by FTX founder Sam Bankman-Fried. They described the firm’s alleged role as creating “shadowy entities” and legal structures that obscured the misuse of customer assets.

Fenwick strongly denied any wrongdoing. The firm stated it had no knowledge of fraud at FTX, defended the quality of its legal services, and chose to settle the matter to focus on its future operations.

Plaintiffs’ motion for preliminary approval of the second tranche of settlements, provisional certification of the proposed settlement class, and approval of the proposed schedule. Source: In Re: FTX Cryptocurrency Exchange Collapse Litigation (1:23-md-03076).

The lawsuit is part of the broader multidistrict litigation known as In Re: FTX Cryptocurrency Exchange Collapse Litigation. Attorney David Boies represented plaintiffs in the case. Fenwick initially sought dismissal before engaging in settlement talks.

As part of the agreement, $54 million will be placed in an escrow account within 120 days of the court’s initial approval. The plaintiffs’ lawyers stated the settlement was fair considering the difficulties and expenses of continuing the legal battle.

FTX, a cryptocurrency exchange, failed in November 2022, leading to its bankruptcy and the revelation of widespread fraud. This fraud resulted in the loss of billions of dollars belonging to its customers. In 2024, Sam Bankman-Fried, the company’s founder, was sentenced to 25 years in prison for stealing approximately $8 billion from those customers.

The Fenwick agreement is the latest in a series of settlements stemming from the FTX bankruptcy. Previous settlements included deals with FTX leaders like Caroline Ellison, Nishad Singh, and Gary Wang, and also with celebrities who promoted the company. Additionally, the auditing firm Prager Metis has agreed to pay around $11.75 million, bringing the total paid by professionals involved to approximately $66 million.

As an analyst following the FTX situation, I see this settlement as another small step in a long recovery process for those who lost money. While any recovery is welcome, it’s still a fraction of the total losses. We’re also seeing increased attention on the professional firms that worked with FTX – regulators and investigators are really digging into what they knew about the exchange’s activities and whether their work inadvertently helped facilitate the fraud.

The recent agreement doesn’t fully settle all legal issues facing the firm. A separate lawsuit, started in May 2026 in Washington, D.C., is still ongoing. It was filed by about 20 FTX customers from various countries and accuses Fenwick and some of its current and former partners of wrongdoing. The customers are seeking financial compensation, reimbursement of legal fees they paid, and additional punitive damages.

In my research, I’ve found the lawsuit in D.C. presents claims very similar to others – essentially, that the law firm’s work allowed customer funds to be misused and helped FTX dodge regulators. While a $54 million settlement has been proposed for the class-action suit, it’s still awaiting final approval from Judge Moore. Until Judge Moore approves it, unfortunately, no money will be distributed to the former FTX customers who are part of the class.

Read More

2026-05-25 00:57