Latest FTX lawsuit update: Users settle with Fenwick & West, fraud liability comes back into focus

New developments have emerged in the legal storm triggered by the collapse of FTX. Some users of the bankrupt crypto platform have reached a settlement with Silicon Valley law firm Fenwick & West, bringing a temporary end to allegations that the firm assisted in committing fraud. According to joint filings submitted to the U.S. District Court in Florida, both parties plan to submit a formal settlement agreement by February 27, pending court approval. Until the final outcome is reached, related procedures and motions will be paused, and specific monetary terms have not been disclosed.

This case stems from FTX’s sudden collapse in November 2022, which froze assets of millions of users and triggered multiple rounds of class-action lawsuits. The plaintiffs allege that Fenwick & West provided “substantial assistance” in the company’s structural design, compliance pathways, and internal arrangements, enabling misconduct to persist over time. They also claim the law firm was aware of client fund commingling and the blurred boundaries between FTX and Alameda Research. Fenwick & West has consistently denied these allegations, emphasizing that its services were routine legal consultations. Nonetheless, the court previously rejected its motion to dismiss, allowing the case to proceed and paving the way for this settlement.

This is not the first time users have attempted to hold external advisors accountable. In 2024, they sued another law firm with which they had a long-term partnership but later withdrew the suit due to insufficient evidence. Compared to that, the agreement with Fenwick & West is seen as a significant milestone in users’ rights protection and could influence future legal actions against auditors, consultants, and promoters.

Meanwhile, former FTX CEO Sam Bankman-Fried (SBF) has spoken out again, claiming that the platform always maintained sufficient assets and that the so-called “bankruptcy” was actually a liquidity run. He stated that customers will ultimately receive compensation exceeding their original deposits, demonstrating that there was no real insolvency. This claim sharply contrasts with the conclusions of the bankruptcy team and continues to fuel controversy over the responsibility and truth behind the FTX incident.

As the settlement progresses, the legal landscape surrounding FTX is being reshaped, and its impact may extend to the entire crypto industry’s compliance and risk management standards.