FTX Customers Seek to Expand Lawsuit Against Former Law Firm Fenwick & West

The filing alleges that Fenwick provided “substantial assistance” to FTX by designing and approving company structures that allowed billions of dollars in customer assets to be misused. 

The plaintiffs accused the firm of representing “clearly conflicted companies,” such as FTX’s sister trading firm Alameda Research and its subsidiary North Dimension, without safeguards to protect customer funds. Prosecutors have described FTX’s collapse as one of the largest financial frauds in U.S. history.

Trial Testimony and Bankruptcy Findings Add Weight

According to the proposed amended complaint, testimony during Bankman-Fried’s trial revealed new details about Fenwick’s alleged involvement. Former FTX executives Zixiao “Gary” Wang, Caroline Ellison, and Nishad Singh all pleaded guilty and testified against Bankman-Fried, who was convicted on seven counts of fraud and money laundering. 

Singh testified that he informed Fenwick about the misuse of customer funds, improper loans, and false representations — and claimed the firm advised on how to facilitate and conceal these acts.

The filing also pointed to findings from an independent examiner in the bankruptcy case, who reviewed more than 200,000 internal documents. The examiner allegedly concluded that the law firm was “deeply intertwined” with FTX’s wrongdoing, maintained “exceptionally close” ties with executives, facilitated conflicted transactions, created shell companies to obscure asset movements, and helped implement encrypted auto-deleting messages that prosecutors later cited as obstruction.

New Securities Law Allegations on Fenwick

The updated lawsuit introduces two additional claims under Florida and California securities laws. Plaintiffs allege Fenwick played an active role in designing, promoting, and facilitating the sale of FTX’s cryptocurrency, FTT, as well as other yield-bearing accounts and instruments that they argue were unregistered securities.

Fenwick has denied the allegations and previously sought to dismiss similar claims, arguing that a law firm cannot be held liable for aiding a client’s misconduct if its actions fall within the scope of representation. The firm did not immediately respond to requests for comment.

This expanded filing is part of a broader multi-district class action targeting FTX, celebrities who endorsed the exchange, and various firms linked to its operations. A similar complaint against another FTX law firm, Sullivan & Cromwell, was dropped earlier this year due to insufficient evidence.

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