FTX Investors Accuse Fenwick & West of Enabling Fraud in Amended Lawsuit

FTX investors have amended their class action lawsuit against Fenwick & West LLP, accusing the law firm of playing a central role in the fraudulent operations of the collapsed cryptocurrency exchange. The lawsuit, filed in the Southern District of Florida, incorporates new evidence from the ongoing criminal trial of FTX co-founder Sam Bankman-Fried and the bankruptcy proceedings of the company. Plaintiffs allege that Fenwick & West actively helped structure shell companies, facilitate misleading transactions, and obscure the misuse of customer funds, enabling the fraudulent activities that led to the exchange’s collapse [1].

The amended filing expands the scope of the allegations, now including claims of securities violations under state law, particularly in Florida and California [2]. Witnesses from FTX, including former executives Zixiao “Gary” Wang, Caroline Ellison, and Nishad Singh, reportedly testified that the firm was aware of the misconduct and provided legal advice on how to conceal it. Nishad Singh, for instance, claimed that Fenwick was not only aware of the fraud but also offered guidance on how to hide it [3].

An independent examiner appointed in the FTX bankruptcy reviewed over 200,000 internal documents and concluded that Fenwick was “deeply intertwined” in nearly every aspect of the exchange’s wrongdoing. The report emphasized the firm’s close relationships with FTX executives and its role in enabling conflicted intercompany transactions, all while using encrypted messaging and shell companies to obscure asset movements [4].

The plaintiffs further accuse the law firm of participating in the marketing and sale of unregistered securities, including the FTX Token (FTT). They argue that these actions were part of a broader strategy to mislead investors and regulators, as well as to obstruct investigations into the exchange’s operations [5]. Fenwick & West has denied the allegations and filed motions to dismiss the claims. In a prior 2023 motion, the firm asserted that it cannot be held liable for aiding a client’s wrongdoing as long as its actions were within the scope of legal representation [6].

This legal action represents a significant escalation in the ongoing litigation against parties involved in the FTX collapse. Previously, the plaintiffs had sued another firm, Sullivan & Cromwell, but dropped those claims due to a lack of sufficient evidence [7]. The renewed focus on Fenwick & West highlights the legal complexities surrounding the FTX case and the broader implications for legal advisors in the cryptocurrency sector.

The lawsuit also draws comparisons to past cases in traditional finance, such as the Enron scandal, where legal firms were held liable for their roles in enabling fraudulent activities [8]. Legal analysts suggest that this case could set a precedent for holding law firms accountable in financial fraud scenarios, potentially leading to increased due diligence in legal counseling roles within the crypto space.

Despite the legal developments, the cryptocurrency markets have remained largely unaffected, with no significant price movements observed in major assets like Bitcoin and Ethereum. Regulatory bodies have yet to issue new enforcement actions specifically linked to the lawsuit, though the case is expected to contribute to the ongoing scrutiny of legal and financial advisors in the crypto industry [9].

Source:

[1] FTX Customers Seek to Update Lawsuit Against Fenwick & West Following New Evidence from Bankman-Fried’s Trial (https://en.coinotag.com/ftx-customers-seek-to-update-lawsuit-against-fenwick-west-following-new-evidence-from-bankman-frieds-trial/)

[2] FTX Customers Amend Lawsuit Against Fenwick & West (https://www.fxleaders.com/news/2025/08/12/ftx-customers-expand-lawsuit-against-fenwick-west-over-8-billion-collapse/)

[3] FTX Customers Sue Fenwick Over Role in Fraud and Securities Violations (https://www.gate.com/post/status/12968062)

[4] FTX Users Bolster Lawsuit Claiming Law Firm Was 'Key' to Fraud (https://www.todayonchain.com/news/article/01K2E4G0BBAMFP2TWETBNM6YXS)

[5] Focus Turns to Fenwick & West in the FTX Investor MDL (https://www.law.com/americanlawyer/2025/08/11/focus-turns-to-fenwick--west-in-the-ftx-investor-mdl/)

[6] FTX Customers Amend Lawsuit Alleging Law Firm Enabled Fraud (https://www.ainvest.com/news/ftx-customers-amend-lawsuit-alleging-law-firm-enabled-fraud-2508/)

[8] FTX Investors Target Fenwick & West as Sole Law Firm in MDL (https://www.law.com/dailybusinessreview/2025/08/11/ftx-investors-target-fenwick--west-as-sole-law-firm-mdl-defendant/)

[9] This legal amendment hasn’t significantly impacted crypto markets, with no major fluctuations observed in crypto asset prices such as BTC and ETH. Regulatory bodies have yet to issue new enforcement actions related specifically to this lawsuit. (https://coinmarketcap.com/community/articles/689b235021bc2a555c718831/)