Fenwick & West, the law firm that advised FTX, agreed to pay $54 million to settle fraud claims filed by FTX customers. The settlement resolves litigation over the firm's role supporting the now-bankrupt exchange.
Fenwick served as outside counsel to FTX during its meteoric rise and collapse in November 2022. The law firm faced lawsuits from customers who lost funds when FTX imploded, with allegations that Fenwick failed to identify or flag the fraud scheme orchestrated by founder Sam Bankman-Fried and key executives.
The $54 million payout represents a significant financial hit for Fenwick, one of Silicon Valley's most prominent law firms. The settlement comes as FTX's bankruptcy estate works to recover assets and distribute them to creditors and harmed customers. FTX had roughly $8 billion in customer losses when it filed for bankruptcy protection.
Bankman-Fried faces criminal charges including wire fraud, money laundering, and conspiracy. He was convicted in November 2023 and sentenced to 25 years in prison. Other executives including Caroline Ellison and Gary Wang also faced criminal charges and pleaded guilty.
Professional liability claims against advisors to FTX have mounted as the scope of the fraud became clear. The settlement signals that Fenwick faced substantial legal exposure over questions about what the firm knew or should have known about FTX's internal controls and business practices.
This settlement follows a pattern of recovery efforts targeting parties that benefited from or enabled FTX's operations. Creditors and customers continue pursuing claims against venture capital firms, exchanges, and other entities that had exposure to FTX.