Investors Accuse Fenwick & West of Assisting in FTX Collapse
Date: 2025-08-14 Author: Henry Casey Categories: BUSINESS
Investors in the bankrupt crypto exchange FTX have filed a lawsuit against the California law firm Fenwick & West. According to them, the company was closely involved in almost all key stages of FTX's activities, which ultimately led to the collapse of the exchange. In particular, the lawyers are accused not only of providing negligent advice, but also of being aware of the illegal nature of the actions of FTX management and actively assisting in their implementation.
According to the case materials, Fenwick & West allegedly developed and implemented corporate schemes that allowed then-CEO Sam Bankman-Fried and his entourage to withdraw hundreds of millions of dollars through fictitious loans. The plaintiffs allege that these transactions were carried out through shell companies, including North Dimension, which were used to disguise customer deposits and withdrawals and to evade regulatory oversight.
The lawsuit against Fenwick & West is part of a larger lawsuit involving more than 130 companies that did business with FTX. However, this firm is the only one accused of not just negligence, but direct involvement in fraudulent transactions.
The documents note that Fenwick & West’s high standing in Silicon Valley played a major role in convincing investors and venture capital funds of FTX’s reliability, which helped the exchange raise more than $1.3 billion despite hidden financial problems.
An independent expert who reviewed more than 200,000 documents in the FTX bankruptcy case concluded that the law firm had “exceptionally close ties” to key figures in the company and facilitated transactions related to the illegal use of client funds.
Former FTX executives testified to the allegations. Former CTO Nishad Singh testified that he notified Fenwick of misconduct, including illegal loans and false statements, and received advice on how to disguise it. Former Alameda Research CEO Caroline Ellison, who was sentenced to two years in prison, confirmed that FTX client funds were used to cover Alameda's debts.
Lawyers note that to hold Fenwick & West liable, it will be necessary to prove not only their knowledge but also their active participation in the schemes, which is a difficult task in legal practice.
Recall that FTX filed for bankruptcy on November 11, 2022, after Alameda Research's financial problems were revealed. Sam Bankman-Fried was found guilty of seven counts of fraud and sentenced to 25 years in prison. He is now serving his sentence in a medium-security prison in California, continuing to maintain his innocence and with a chance to be paroled four years early.
