Twenty former FTX customers from five countries have filed a $525 million lawsuit accusing Silicon Valley law firm Fenwick & West of playing an active role in the conduct that preceded the exchange’s collapse. The complaint alleges the firm helped create structures that concealed fund flows between FTX and Alameda Research, claims that could widen liability standards for professional advisers in crypto if upheld.
The lawsuit argues that Fenwick & West went beyond ordinary legal representation and “provided a veneer of legitimacy” that reassured investors. Plaintiffs allege the firm helped build corporate and contractual arrangements that made it harder to detect how customer funds were allegedly routed to Alameda.
Plaintiffs Allege Legal Structures Obscured Fund Transfers
According to the complaint, Fenwick & West helped create shell entities, including a Delaware company identified as North Dimension Inc. Plaintiffs claim those entities and related agreements helped obscure the movement of customer assets within the FTX-Alameda structure.
The filing also cites testimony from Nishad Singh, a former FTX director of engineering who pleaded guilty to fraud charges. Plaintiffs allege Fenwick lawyers were told about misuse of customer assets and advised on ways to conceal those activities rather than report them.
Another allegation centers on internal communications. The complaint claims the firm helped implement an auto-delete messaging policy on Signal, which plaintiffs say hindered later internal and external investigations into FTX’s operations.
The lawsuit also leans on findings from a 2024 court-appointed bankruptcy examiner. Plaintiffs highlighted the examiner’s conclusion that Fenwick & West was “deeply intertwined in nearly every aspect of FTX Group’s wrongdoing”, using that language to support their claims.
Fenwick Denies Wrongdoing as Liability Questions Grow
The complaint brings seven claims against Fenwick & West, including malpractice, fraud and gross negligence. It seeks the return of legal fees and punitive damages against named partners Tyler Newby and Daniel Friedberg for alleged individual conduct.
Fenwick & West has denied the allegations, maintaining that its work for FTX was routine, lawful and limited to standard legal representation. The firm says it was not involved in misconduct by FTX insiders, despite the plaintiffs’ claims.
The firm has also reportedly submitted a proposed settlement with FTX users to a Florida federal court. That proposal was filed on February 27, 2026, though the settlement terms remain undisclosed.
The case raises a broader question for crypto markets: where does routine legal advice end and actionable complicity begin? If the plaintiffs prevail, law firms and other professional advisers may face greater liability exposure when serving high-risk digital-asset clients.
The litigation could increase due-diligence costs and documentation standards. Crypto clients may face more restrictive engagement terms, deeper compliance reviews and tighter recordkeeping requirements from law firms wary of post-collapse liability.
