Fenwick & West LLP agreed on Friday to pay $54 million to settle a class action case tied to FTX. The FTX settlement was filed in federal court in Miami and needs approval from U.S. District Judge K. Michael Moore.
According to a Reuters report, the former crypto exchange customers filed the lawsuit in 2023. They alleged that Fenwick, the primary law firm for FTX, had assisted in certain aspects of the alleged fraud prior to the company’s demise in 2022.
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FTX Settlement Includes Fenwick Claims Over Legal Structures
The deal with FTX represents the biggest of a second round of deals in the case. Auditor Prager Metis agreed to pay $11.75 million. Former Miami Heat forward Udonis Haslem, who promoted FTX, agreed to pay $420,000.
Fenwick was a key figure in FTX’s legal structure, according to the plaintiffs. The complaint alleged that the firm helped create entities and strategies that allowed the misuse of customer funds to be hidden.
Transfers between FTX and Alameda Research were also a major complaint. Plaintiffs alleged that Fenwick assisted in constructing buildings that facilitated fund commingling at both companies.
The other claim concerned licenses for money transfer. The customers stated that Fenwick counseled FTX in structuring that minimized the requirement to acquire such licenses. Fenwick initially tried to dismiss the suit and in February agreed to a settlement.
The FTX settlement adds to the legal fallout from the exchange’s failure. In 2022, FTX went under and faced criticism from the U.S. regulatory bodies and lawmakers. The case is part of a broader group of cases relating to customer losses.
FTX Recovery Trust Faces Criticism Over Asset Sales
Repayments also are flowing via the FTX Recovery Trust. The trust is in charge of the payments to former creditors and customers. In March, it paid $2.2 billion to affected parties. The second tranche will take place on May 29.
The trust’s asset sales have been criticized by some former customers and creditors. Recovered assets were sold at discounts or below later market values, they said. Their grievances have piled up stress concerning the wider FTX settlement process.
The one included a 5% investment in AI firm Cursor. In April of 2023, the Recovery Trust sold that stake for approximately $200,000. Later, it was valued at approximately $3 billion in April 2026.
The FTX settlement is now pending approval by the courts. The deal would resolve the Fenwicks’ involvement in the customer lawsuit. Other recovery and asset sale issues remain unresolved.
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