FTX customers have filed a lawsuit against Silicon Valley law firm Fenwick & West, accusing it of actively facilitating the misappropriation of billions in customer funds during the cryptocurrency exchange’s collapse. Evidence surfaced during the criminal trial against former CEO Sam Bankman-Fried and FTX’s bankruptcy proceedings forms the core of the legal action.
The complaint specifically alleges Fenwick & West provided critical structuring services for entities central to the alleged fraud, including trading firm Alameda Research and obscure payment processor North Dimension. Plaintiffs claim these entities were deliberately designed to mask flows of illicitly diverted customer assets.
Legal analysts widely anticipate the case could redefine liability standards for law firms advising cryptocurrency platforms, setting a precedent for heightened legal responsibility when structuring potentially fraud-enabling entities. A favorable ruling may establish a new benchmark for professional oversight in the digital asset sector.
Concurrently, the lawsuit offers a novel avenue for FTX investors seeking redress. By targeting the law firm’s resources and potential professional liability coverage, it presents an alternative recovery pathway separate from the ongoing FTX bankruptcy proceedings.