FTX Users Reach Settlement With Fenwick & West in Fraud Lawsuit

A group of former FTX customers has reached a proposed settlement with Silicon Valley law firm Fenwick & West in a class-action lawsuit alleging the firm’s role in facilitating or enabling the fraud that led to the cryptocurrency exchange’s 2022 collapse.

Announced via a joint filing on January 30, 2026 (reported widely on February 2–3), in the U.S. District Court for the Southern District of Florida (case In re FTX Cryptocurrency Exchange Collapse Litigation, No. 1:23-md-03076-KMM), the agreement resolves claims of racketeering, aiding-and-abetting fraud, and related misconduct. Plaintiffs accused Fenwick—FTX’s lead outside counsel—of advising on corporate structures to evade money transmitter registrations, gaining visibility into commingled funds between FTX and Alameda Research, and playing a “key and crucial role” in the fraud orchestrated by former CEO Sam Bankman-Fried.

Fenwick has denied the allegations and previously sought dismissal, but the case proceeded after a November 2025 ruling. The proposed settlement comes without admission of wrongdoing by the firm. Financial terms remain undisclosed, with parties planning to submit full details—including the settlement amount and distribution—for court approval on February 27, 2026. Litigation deadlines and motions are paused pending finalization.

This development fits into broader post-FTX litigation targeting third-party enablers, including law firms, auditors, and consultants, amid efforts to hold professional advisors accountable for overlooking or contributing to risky practices. It follows Bankman-Fried’s 2023–2024 convictions on multiple fraud counts and ongoing bankruptcy proceedings under John J. Ray III, where administrators continue recovering assets for creditor and customer distributions (with significant progress reported in 2025 reimbursements).

Legal experts view the settlement as a potential precedent, signaling increased scrutiny of gatekeepers in high-risk sectors like crypto. It may prompt firms to heighten due diligence and compliance when advising digital asset clients. For affected users, it represents incremental progress toward recovery in one of the sprawling MDL actions tied to FTX’s downfall, though suits against other parties persist.

As the February 27 hearing approaches, the outcome could influence future professional liability standards in the evolving crypto regulatory landscape.