Who Paved the Way for the FTX Fraud? Legal Advisory Law Firm Hit with $54 Million Settlement

▲ FTX

U.S. law firm Fenwick & West has agreed to pay a $54 million settlement in a class-action lawsuit filed by customers over legal advice provided to the bankrupt cryptocurrency exchange FTX. FTX customers have alleged that the Silicon Valley-based law firm facilitated wrongdoing related to the FTX incident, which is considered one of the largest financial frauds in U.S. history.

Bitcoinist reported on May 24 (local time) that Fenwick & West agreed to resolve the claims of FTX customers through a settlement filed with the federal court in Miami. The settlement still requires approval from U.S. District Judge K. Michael Moore in Miami.

The FTX customers who filed the lawsuit claimed that Fenwick & West served as a key external legal advisor during FTX's expansion of its global cryptocurrency trading platform. The plaintiffs pointed out that the law firm “helped create and implement strategies that facilitated FTX's fraud,” and supported the establishment of regulatory and operational structures linked to the misuse of customer funds.

Despite the settlement, Fenwick & West denied allegations of intentional involvement. The law firm stated in a public statement that it “was unaware of FTX's fraud” and affirmed the integrity of its legal work. This $54 million settlement is the largest presented so far in the second wave of FTX-related class-action settlements.

Other settlement cases were also mentioned. Prager Metis, FTX's former auditor, agreed to pay $11.75 million, and the settlement related to Udonis Haslem, a former Miami Heat player who promoted FTX, is known to be $420,000.

FTX collapsed in November 2022 after allegations surfaced that approximately $11 billion to $13 billion of customer funds were diverted to its sister trading firm, Alameda Research. The FTX bankruptcy fueled widespread fear across the digital asset market, leading to a shock that saw $200 billion evaporate from the global cryptocurrency market capitalization.

FTX founder Sam Bankman-Fried was convicted of fraud and conspiracy charges in 2024 and sentenced to 25 years in prison. He has pleaded not guilty and has appealed the conviction, arguing that his initial trial was unfairly conducted.

The FTX Recovery Trust continues to work on repaying affected creditors under the company's Chapter 11 restructuring process. The FTX bankruptcy estate announced a fourth distribution of approximately $2.2 billion in March 2026, bringing the cumulative repayments to eligible claimants close to $10 billion. Several customer groups are reportedly reaching full or near-full recovery levels under the court-approved repayment plan.

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