FTX Customers Lawsuit Against Fenwick Alleges Law Firm Enabled Massive Fraud

Highlights:

• The lawsuit against Fenwick by FTX customers has cited new evidence that links the law firm to the exchange’s collapse.
• The plaintiffs allege that Fenwick designed structures that enabled the diversion of customer funds.
• The new claims accuse the legal adviser of aiding sales of unregistered securities.

FTX customers have moved to amend their lawsuit against Fenwick & West, the former legal adviser to the collapsed exchange. They submitted the amended complaint, with new evidence regarding the criminal proceedings against Sam Bankman-Fried and the bankruptcy discovery process.

🚨FTX CLIENTS PREPARING TO AMEND LAWSUIT AGAINST FENWICK & WEST, ACCUSING LAW FIRM OF PLAYING A CRUCIAL ROLE IN FTX COLLAPSE.

PLAINTIFFS ARGUE FENWICK & WEST'S INVOLVEMENT ENABLED THE DOWNFALL OF THE CRYPTO EXCHANGE.#FTX #FenwickAndWest #CryptoCollapse #FTXLawsuit… pic.twitter.com/Dk285iCUQ1

— Crypto News Hunters 🎯 (@CryptoNewsHntrs) August 12, 2025

Fenwick was directly involved in facilitating wrongdoings that cost billions to customers, according to the filing. According to the plaintiffs, the company developed and authorized corporate arrangements that enabled the diversion of funds from exchange accounts. They allege that Fenwick collaborated directly with Alameda Research and its sub-company North Dimension, which did not have internal controls to curb asset misuse.

The group reports that these arrangements facilitated the transfer of funds belonging to customers without detection. According to them, these measures played a critical role in the collapse of the exchange. Plaintiffs maintain that Fenwick’s work not only allowed improper transactions but also helped conceal them from external scrutiny.

FTX Customers’ Lawsuit Against Fenwick Cites New Evidence

The proposed amendments include testimony from Nishad Singh, Gary Wang, and Caroline Ellison, all former senior executives of FTX or Alameda Research. According to Singh, he informed Fenwick of irregular loans, misrepresentation, and misuse of customer funds. He alleged the firm then gave advice on how to hide these actions.

More than 200,000 documents, many related to Fenwick, were reviewed by an independent examiner hired during the bankruptcy. The examiner concluded that the law firm was connected to the leadership of FTX exceptionally closely and was deeply integrated into its work. The report also accused Fenwick of creating shell companies to obscure asset transfers.

In addition, plaintiffs say Fenwick introduced encrypted Signal chats with auto-delete features for executives. They claim these measures helped conceal discussions about transactions and asset movements. According to court documents, the firm also facilitated intercompany deals that used North Dimension bank accounts to route customer deposits.

Bankman-Fried testified that he relied heavily on Fenwick’s legal guidance, alongside FTX’s in-house counsel, for matters involving these accounts. Plaintiffs say this shows the firm’s central role in key decisions that later became part of the fraud case. They argue the new evidence directly connects Fenwick’s legal advice to actions that harmed customers. In a related development, Changpeng Zhao has filed a motion to dismiss a $1.8 billion lawsuit brought by FTX. The lawsuit centers on a share buyback deal that FTX claims was funded with misused customer assets.

⚖️ Binance co-founder CZ seeks dismissal from $1.8B FTX lawsuit, citing lack of U.S. court jurisdiction.

— TheBenefactor.Net (@thebenefactor_) August 8, 2025

Fenwick Faces Fresh Securities Charges

The amended complaint includes the states of Florida and California’s securities law claims. According to the plaintiffs, Fenwick helped to design, market, and deliver non-registered securities. These are FTT tokens native to FTX, yield-generating accounts, and additional financial products governed by the exchange.

The group claims that the dealings of Fenwick went beyond those of normal legal representation. They claim the firm’s actions supported the marketing and sale of these instruments to residents in both states. The complaint says this assistance made the securities available to a wider audience, despite not being registered.

In its earlier motion to dismiss, Fenwick argued it could not be blamed for a client’s misconduct if its work stayed within the scope of representation. In its effort to recover funds, FTX has filed lawsuits against NFT Stars Limited and Kurosemi Inc., accusing both firms of withholding digital assets that FTX says are essential to fulfilling its commitments to creditors.