FTX users and Fenwick & West have reached a proposed settlement over a 2023 lawsuit alleging the law firm helped carry out the fraud that led to the crypto exchange’s collapse over three years ago.
Fenwick and lawyers representing FTX users said in a joint filing to a Florida federal court on Friday that they plan to lodge the proposed settlement with the court for its approval on Feb. 27.
The filing did not disclose the specific terms of the settlement, but both parties asked the court to pause all deadlines and pending motions in the class-action lawsuit ahead of the settlement filing.
The FTX users’ lawsuit against Fenwick is part of a multidistrict class-action lawsuit filed after FTX collapsed in late 2022. Users have brought lawsuits against the exchange, celebrities accused of promoting it, and multiple companies that worked with the exchange.
An excerpt from the joint filing on Friday stipulates that Fenwick and FTX users intended to settle. Source: CourtListener
The lawsuit, first filed in 2023 and updated in August, accused Fenwick of playing “a key and crucial role in the most important aspects of why and how the FTX fraud was accomplished.”
The users claimed the fraud at FTX “was only possible because Fenwick provided ‘substantial assistance’ by creating and approving the structures that allowed numerous frauds.”
The lawsuit claimed Fenwick advised FTX on how to structure its business to avoid money transmitter registrations and “had visibility into the commingling of funds and blurred boundaries” between FTX and Alameda Research.
Fenwick sought to dismiss the lawsuit, arguing it was “not liable for aiding and abetting a fraud it knew nothing about” and asserted it provided “routine and lawful legal services.”
The court allowed the FTX users’ amended complaint to proceed in November, denying Fenwick’s motion to dismiss.
Fenwick & West and lawyers for FTX users, the Moskowitz Law Firm, did not immediately respond to a request for comment.
The FTX users had also sued Sullivan & Cromwell, FTX’s former outside counsel, in February 2024, accusing it of playing a role in FTX’s multibillion-dollar fraud, but voluntarily dismissed the complaint eight months later over a lack of evidence.