Fenwick & West LLP, the primary law firm that advised the former cryptocurrency exchange FTX, has agreed to pay $54 million to settle a class-action lawsuit filed by customers in 2023. Plaintiffs allege that the firm played a significant role in the fraudulent schemes carried out by FTX and facilitated illegal activities. This is reported by Cointelegraph.com reports .
The Silicon Valley-based law firm is accused of helping the bankrupt FTX exchange conceal the misuse of customer funds. Specifically, Fenwick & West allegedly developed legal structures and strategies to hide the commingling of funds, including transfers between the exchange and its trading arm, Alameda Research.
Furthermore, legal advisors were involved in creating schemes that allowed FTX to avoid the obligation of obtaining money transmitter licenses. Although Fenwick & West initially attempted to dismiss the lawsuit, it decided to reach a settlement in February. The agreement now awaits approval by a U.S. judge.
This settlement marks the next stage in the legal proceedings related to the collapse of the FTX exchange in 2022. The crisis dealt a severe blow to the entire crypto industry and prompted U.S. regulators and lawmakers to impose stricter oversight on the sector.
Currently, the FTX Recovery Trust is engaged in distributing assets to creditors and customers. However, many customers are dissatisfied with the Trust's operations, claiming that assets were sold at very low prices. For example, in 2023, a 5% stake in the AI company Cursor was sold for $200,000, even though the value of this stake was projected to reach $3 billion by 2026.
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