A group of former FTX users has filed a massive lawsuit against law firm Fenwick & West, accusing the firm of helping conceal fraud tied to the collapse of the crypto exchange.
Key Takeaways
- Twenty FTX victims from five countries or jurisdictions filed a lawsuit seeking more than $525 million in damages.
- The lawsuit accuses Fenwick & West of helping hide the misuse of customer funds and creating structures that enabled fraud.
- Former FTX engineering director Nishad Singh allegedly told Fenwick attorneys about the misuse of funds, according to the complaint.
- Plaintiffs are seeking compensation, repayment of legal fees earned from FTX, and punitive damages against specific firm partners.
What Happened?
A group of 20 former FTX customers has sued Silicon Valley law firm Fenwick & West LLP, claiming the firm played a critical role in helping conceal fraudulent activities at the now bankrupt crypto exchange. The complaint was filed in the US District Court for the District of Columbia and seeks more than $525 million in damages.
The lawsuit relies heavily on testimony from former FTX executive Nishad Singh, who previously pleaded guilty to fraud related charges and testified during Sam Bankman Fried’s criminal trial.
xJUST IN: Fenwick & West sued for $525M by 20 FTX victims, alleged to have helped build the infrastructure that kept the fraud running. If the case gains traction, it could complicate litigation risk for law firms tied to crypto collapses. $FTX pic.twitter.com/ReasOHZzv2
— Bpay News (@bpaynews) May 14, 2026
Lawsuit Claims Fenwick Helped Conceal Fraud
According to the complaint, Singh informed Fenwick attorneys that customer funds were being misused at FTX. Instead of distancing itself from the exchange, the lawsuit claims the law firm advised on ways to hide the activity.
The plaintiffs allege that Fenwick helped establish North Dimension Inc., a Delaware based shell company that reportedly moved more than $3 billion in customer funds. The company was allegedly presented as an electronics retailer while functioning as part of the broader financial structure tied to FTX operations.
The lawsuit also accuses the firm of implementing FTX’s Signal auto delete messaging system. Federal prosecutors previously argued that the messaging policy made it harder for regulators and investigators to detect the fraud taking place inside the company.
The complaint names six individual defendants alongside Fenwick & West and includes allegations of malpractice, fraud, and gross negligence.
Bankruptcy Examiner Findings Add Pressure
The lawsuit references findings from a court appointed bankruptcy examiner who reviewed more than 200,000 documents after FTX filed for bankruptcy in November 2022.
According to the complaint, the examiner concluded that Fenwick was “deeply intertwined in nearly every aspect of FTX Group’s wrongdoing.” The report allegedly found that the law firm helped create corporate structures for both FTX and Alameda Research, established shell entities to obscure money transfers, and drafted backdated agreements connected to illicit fund movements.
“These findings are those of a court appointed officer based on documentary evidence in federal bankruptcy proceedings to which Fenwick was a party,” the lawsuit stated.
After the exchange collapsed, the lawsuit claims Fenwick removed references to FTX from its website and hired defense attorneys from Gibson Dunn before any civil claims had been filed.
Plaintiffs Seek More Than Financial Compensation
The plaintiffs are demanding compensatory damages exceeding $525 million. They are also asking the court to order the return of all legal fees Fenwick earned from FTX.
In addition, the complaint seeks punitive damages against partners Tyler Newby and Daniel Friedberg, accusing them of “deliberate and reckless individual professional conduct.”
The case adds another legal challenge connected to the fallout from the collapse of FTX, one of the biggest failures in crypto industry history.
Sam Bankman Fried’s Trial Continues to Shape Cases
The lawsuit arrives shortly after a federal judge rejected Sam Bankman Fried’s request for a new trial. Judge Lewis Kaplan dismissed arguments from the former FTX CEO that new evidence could challenge the government’s case.
Bankman Fried had argued that former FTX executives Ryan Salame and Daniel Chapsky could dispute claims about the exchange’s insolvency. He also claimed Nishad Singh altered his testimony under pressure from prosecutors.
Judge Kaplan rejected those claims, describing them as “wildly conspiratorial and entirely contradicted by the record.”
CoinLaw’s Takeaway
In my experience, lawsuits like this show how deeply the fallout from FTX continues to spread beyond crypto companies themselves. What stands out here is that the focus is now shifting toward outside firms and advisers that allegedly helped build or protect these structures. I found the bankruptcy examiner’s findings especially serious because they suggest the issue was not limited to internal misconduct at FTX. If courts determine that professional service firms knowingly enabled fraudulent activity, this case could reshape how law firms approach crypto clients in the future.
