Fenwick Hit with $525M Lawsuit by FTX Customers Over Alleged Fraud Cover-Up
On Monday, May 18, 2026, Coin Insider reported that a group of 20 FTX customers sued Fenwick & West LLP for more than $525 million, accusing the Silicon Valley law firm of aiding in the concealment of fraud at the now-defunct cryptocurrency exchange. Fenwick & West has denied any wrongdoing in previous FTX-related legal proceedings, asserting that it provided legitimate legal services.
The new complaint was officially filed in the U.S. District Court for the District of Columbia and includes six individual defendants. The plaintiffs, hailing from five different countries or jurisdictions, claim to have suffered significant financial losses following the implosion of FTX in 2022.
The lawsuit alleges that Fenwick & West exceeded the role of ordinary outside counsel, actively participating in the creation of structures designed to hide the misuse of customer funds. Reports indicate that the claims brought against the firm include malpractice, fraud, and gross negligence.
The plaintiffs are seeking over $525 million in compensatory damages, in addition to legal fees and punitive damages specifically targeting Tyler Newby and Daniel Friedberg. Furthermore, the plaintiffs contend that Fenwick & West’s involvement lent FTX a misleading appearance of legitimacy, which may have deterred customers from withdrawing their funds prior to the exchange’s collapse.
A key element of the customers’ allegations is supported by the testimony of Nishad Singh, a former FTX engineering director who has pleaded guilty and testified in the criminal trial of Sam Bankman-Fried. According to summaries of the complaint, the plaintiffs assert that Singh’s account indicates Fenwick attorneys were aware of the misuse of customer funds but continued to support structures that obscured internal operations at both FTX and Alameda Research.
The complaint also reportedly accuses the firm of assisting in the establishment of North Dimension, a shell entity allegedly used in FTX’s banking framework to receive customer deposits. These accusations are allegations and have not yet been determined as findings of liability.
This latest legal action follows a settlement reached in February, where Fenwick & West agreed to resolve a separate lawsuit filed by FTX customers concerning its work for the exchange. In that earlier case, the firm also denied wrongdoing and maintained that its services were routine and lawful.
A 2024 bankruptcy examiner report had previously scrutinized Fenwick & West’s engagement with FTX, examining matters related to founder loans, Alameda-related structures, and exchange transactions. The new lawsuit in D.C. represents an additional legal challenge for Fenwick & West as FTX customers continue their efforts to recover losses stemming from the exchange’s collapse.
Source: Coin Insider
