FTX Customers Sue Fenwick & West for $525 Million

Twenty customers of the collapsed crypto exchange FTX filed a $525 million lawsuit against Silicon Valley law firm Fenwick & West and six individual defendants on Wednesday in U.S. District Court for the District of Columbia. The complaint alleges the firm helped conceal misuse of customer funds and set up shell companies that obscured transfers.

The plaintiffs say they lost their life savings when FTX failed and that Fenwick’s work gave the exchange a false appearance of legitimacy that prevented withdrawals. The complaint centers on testimony from Nishad Singh, FTX’s former director of engineering, who pleaded guilty to fraud. The filing alleges Singh informed Fenwick attorneys that customer funds were being diverted and that the firm advised on ways to hide those transfers rather than withdrawing from the work.

The complaint accuses Fenwick of helping create North Dimension Inc., a Delaware entity presented as an electronics retailer that the plaintiffs say routed more than $3 billion of customer funds. It also alleges Fenwick implemented FTX’s Signal auto-delete messaging policy, which prosecutors have cited as a factor that impeded investigators.

A court-appointed bankruptcy examiner, after reviewing more than 200,000 documents, reported in 2024 that Fenwick built corporate structures for FTX and affiliated Alameda Research, formed shell entities to obscure money movements and drafted backdated agreements to cover transfers. The complaint quotes the examiner as finding Fenwick was “deeply intertwined in nearly every aspect of FTX Group’s wrongdoing.” The filing adds that those findings are based on documentary evidence in federal bankruptcy proceedings to which Fenwick was a party.

The lawsuit says Fenwick removed references to FTX from its website after the exchange filed for bankruptcy in November 2022 and retained defense counsel at Gibson Dunn before any civil suit was publicly filed. The plaintiffs bring seven claims, including legal malpractice, fraud and gross negligence, and seek more than $525 million in compensatory damages, the return of legal fees Fenwick earned from FTX, and punitive damages against partners Tyler Newby and Daniel Friedberg for what the complaint calls deliberate and reckless individual professional conduct.

The complaint appears amid ongoing litigation and criminal prosecutions tied to FTX’s collapse. Last month, the judge who sentenced former FTX CEO Sam Bankman‑Fried denied his request for a new trial and described his new‑evidence claims as “wildly conspiratorial and entirely contradicted by the record.” The judge also previously sentenced Bankman‑Fried to 25 years in prison.

Fenwick has not been found liable on the allegations and has not publicly commented in response to the complaint. The case will proceed in U.S. District Court in the District of Columbia, where the plaintiffs will seek to hold the firm responsible for the conduct described in their filing.