American law firm to pay $54 million over FTX case

Fenwick & West, the U.S. law firm that provided legal advice to the FTX cryptocurrency exchange, agreed in 2023 to pay $54 million to settle a class-action lawsuit filed by customers, according to Zamin.uz.

The plaintiffs alleged that the firm was directly involved in the extensive fraudulent activities carried out by the FTX exchange and helped create conditions for the implementation of illegal schemes. This information was reported in international publications.

Based in Silicon Valley, this influential firm is accused of assisting FTX in concealing the misappropriation of customer funds as the exchange headed toward bankruptcy. Specifically, lawyers are suspected of developing special legal structures and strategies to commingle the exchange’s funds with assets of Alameda Research, its trading arm, and to conceal intercompany transfers.

Additionally, the legal advisors are accused of participating in the creation of various mechanisms that allowed FTX to evade obligations to obtain licenses related to money transmission.

Although Fenwick & West initially sought to deny all allegations against it, the firm ultimately deemed reaching a settlement to be reasonable.

This event dealt a serious blow to the entire cryptocurrency market. As a result, U.S. regulators and lawmakers began advocating for stricter oversight of the digital assets sector.

Currently, a special task force working to recover FTX assets is focused on returning available funds to creditors and affected customers. However, many customers remain dissatisfied with the process, alleging that valuable assets were sold at unjustifiably low prices.

For example, in 2023, a stake in a promising artificial intelligence company was sold for $200,000, while shortly afterward it became known that the market value of that stake had reached several billion dollars.