Former FTX law firm Fenwick to settle lawsuit over work for crypto exchange

By Mike Scarcella

WASHINGTON, Feb 2 (Reuters) - U.S. law firm Fenwick & West, which advised FTX before its 2022 blockbuster collapse and bankruptcy, has agreed to settle a lawsuit by FTX customers who alleged the firm helped the crypto exchange’s chief executive carry out one of the largest financial frauds in U.S. history.

Lawyers for the plaintiffs and Fenwick said in a joint filing on Friday that they plan to present the settlement terms later this month in federal court in Florida.

Silicon Valley-founded Fenwick, known for its work for technology clients, was a lead outside law firm for FTX as it rose to prominence as one of the largest crypto platforms in the world.

FTX chief executive Sam Bankman-Fried was sentenced in 2024 to 25 years in prison for stealing $8 billion from customers in a massive fraud scheme. He pleaded not guilty and has appealed his conviction.

Fenwick and lawyers for the firm did not immediately respond to requests for comment. Fenwick has argued that it provided routine and lawful legal advice to FTX and played no role in Bankman-Fried's crimes.

Lead attorneys for the plaintiffs said they were pleased to reach a settlement with Fenwick and other defendants but did not disclose any terms.

The plaintiffs alleged Fenwick helped to craft “shadowy entities” that facilitated Bankman-Fried's fraud and structured deals to circumvent regulatory scrutiny.

“Fenwick provided services to the FTX Group entities that went well beyond those a law firm should and usually does provide,” the lawsuit said. “When asked by FTX Group executives for counsel, Fenwick lawyers were eager to craft not only creative, but illegal strategies.”

Fenwick, in seeking dismissal said it was among many other law firms representing FTX and never represented Bankman-Fried or other FTX insiders who executed the company's fraud. The firm said the plaintiffs had failed to show that Fenwick acted outside the scope of its representation.

The case is In re FTX Cryptocurrency Exchange Collapse Litigation, U.S. District Court, Southern District of Florida, No. 1:23-md-03076-KMM.

For the plaintiffs: David Boies of Boies Schiller Flexner, and Adam Moskowitz of The Moskowitz Law Firm

For Fenwick: Kevin Rosen and Michael Holecek of Gibson Dunn, and Nicole Atkinson and David Atkinson of Gunster, Yoakley & Stewart

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