FTX users and law firm Fenwick & West reached a proposed settlement in a 2023 lawsuit that accused the firm of helping enable the fraud behind the crypto exchange’s 2022 collapse. In a joint filing in a Florida federal court, the parties said they plan to submit the settlement to the court for approval on Feb. 27.
The filing did not disclose settlement terms, but both sides asked the court to pause deadlines and pending motions in the class-action case ahead of the approval filing. The suit against Fenwick is part of a multidistrict class-action suit brought after FTX’s collapse, in which users sued the exchange and others tied to it.
Originally filed in 2023 and amended in August, the complaint alleged Fenwick played “a key and crucial role in the most important aspects of why and how the FTX fraud was accomplished.” Plaintiffs claimed Fenwick provided “substantial assistance” by creating and approving structures that enabled fraud, advised FTX on avoiding money transmitter registrations, and had visibility into commingled funds and blurred lines between FTX and Alameda Research.
Fenwick moved to dismiss the suit, saying it was “not liable for aiding and abetting a fraud it knew nothing about” and that it provided routine, lawful legal services. In November, the court denied Fenwick’s motion and allowed the amended complaint to proceed.
Fenwick & West and the Moskowitz Law Firm, which represents the FTX users, did not immediately respond to requests for comment.
Separately, FTX users sued Sullivan & Cromwell, FTX’s former outside counsel, in February 2024 alleging a role in the multibillion-dollar fraud, but voluntarily dismissed that complaint eight months later for lack of evidence.
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