FTX’s former law firm, auditor agree to pay $66 million to settle customer claims over fraud
The law firm, Fenwick & West, denied wrongdoing and still faces a separate $525 million suit in Washington that is not covered by Friday's deal.
FTX's former law firm Fenwick & West and the exchange's auditor have agreed to pay $66 million to settle customer claims related to the crypto platform's collapse and fraud allegations. The settlement was announced Friday, though Fenwick & West has denied any wrongdoing in the matter. The law firm continues to face a separate $525 million lawsuit in Washington that is not covered by this settlement agreement.
The settlement stems from the dramatic collapse of FTX in November 2022, when the exchange filed for bankruptcy amid allegations of mismanagement and fraud by founder Sam Bankman-Fried. Customers lost billions of dollars when the platform shuttered, leading to numerous lawsuits against FTX and associated parties. Bankman-Fried was subsequently convicted on multiple fraud charges and sentenced to 25 years in prison.
The agreement represents another step in the complex process of recovering funds for FTX customers, though the amount is relatively modest compared to the estimated $8 billion shortfall in customer funds. Legal settlements with service providers like law firms and auditors have become common in major corporate collapses, as creditors seek to recover assets from any parties potentially connected to the fraud.
The larger Washington lawsuit against Fenwick & West remains pending, which could result in additional financial exposure for the law firm if unsuccessful in their defense.
Source: The Block
