Fenwick & West to pay $54M to settle FTX customer suit

Fenwick & West LLP agreed to pay $54 million to settle a 2023 class action brought by former customers of the bankrupt FTX exchange. The plaintiffs allege the law firm helped create entities and structures that concealed the commingling of customer funds.

The complaint says Fenwick advised on the formation of legal entities, internal structures and other strategies that obscured transfers between FTX and its trading arm, Alameda Research. The filing also alleges the firm counseled the exchange on ways to avoid obtaining money transmitter licenses.

Fenwick was the principal outside law firm advising FTX before the exchange collapsed in November 2022. The firm initially moved to dismiss the lawsuit and later agreed to the settlement in February. Court filings reflecting the $54 million agreement were filed Friday; the deal still requires approval by a U.S. judge.

The case is among several legal actions tied to the collapse of FTX. Fenwick faces other litigation, including a separate suit seeking $525 million over the firm’s alleged role in the exchange’s failure.

The settlement comes as the FTX Recovery Trust, which manages recovered assets for former customers and creditors, continues distributions. The trust distributed $2.2 billion in March and scheduled another tranche for May 29.

Some creditors and former customers have criticized the trust’s liquidation approach, saying recovered assets were often sold at steep discounts. As an example, the trust sold roughly a 5% stake in an AI company called Cursor for about $200,000 in April 2023; affected parties cited estimates that the same stake had a value near $3 billion by April 2026.

Court filings in the Fenwick case summarize the plaintiffs’ claims and describe the proposed settlement. Finalization will depend on judicial approval and any terms the court requires as part of the class-action resolution.

The $54 million payment settles the class action against Fenwick but does not resolve other claims related to FTX; litigation and asset recoveries remain ongoing.