Fenwick & West Reaches $54M Settlement Agreement with FTX Victims
In February 2026, the law firm reached a settlement deal while simultaneously defending against a separate $525 million legal action related to its involvement in the FTX crypto exchange failure.
On Friday, Fenwick & West LLP, which served as the primary legal counsel to the collapsed cryptocurrency platform FTX, reached an agreement to pay $54 million in order to resolve a class action lawsuit brought forward in 2023 by former users of the now-defunct exchange.
According to the initial complaint, the plaintiffs claim that Fenwick "facilitated FTX's fraud" through playing "a key and crucial role in the most important aspects of why and how the FTX fraud was accomplished."
The legal action contends that the California-based law firm operating out of Silicon Valley assisted the currently bankrupt FTX in concealing the improper use of customer deposits through the establishment of corporate entities, organizational frameworks and additional tactics designed to mask the improper mixing of assets, including fund movements between the platform and its affiliated trading division, Alameda Research.
Among these tactics was providing counsel to FTX regarding the creation of corporate structures designed to exempt the platform from the requirement to obtain money transmitter licenses.
Prior to reaching the settlement agreement with plaintiffs in February, Fenwick had initially moved to have the legal case dismissed. The settlement, however, remains subject to approval by a United States judge.
This settlement represents the most recent chapter in the ongoing legal consequences stemming from the 2022 implosion of the FTX platform, an event that created tremors throughout the cryptocurrency sector and resulted in intensified oversight from regulatory bodies and legislative authorities in the United States.
FTX estate pays former customers and creditors at steep discount
During March, the FTX Recovery Trust, the entity responsible for managing the allocation of recovered funds to former creditors and users of the platform, disbursed $2.2 billion to the affected individuals and entities.
The subsequent round of reimbursement payments is set to occur on May 29.
Nevertheless, users and former creditors of the platform have voiced concerns that the Trust has poorly handled the asset liquidation process, frequently disposing of the reclaimed holdings at significantly reduced prices or well below the peak valuations that were achieved in the period after FTX's downfall.
In April 2023, the Recovery Trust disposed of a 5% ownership position in artificial intelligence firm Cursor for approximately $200,000, thereby forfeiting substantial potential gains when the valuation of that identical 5% stake surged to roughly $3 billion by April 2026.