- Fenwick & West accused of designing structures to hide FTX’s misuse of customer funds.
- Nishad Singh’s testimony links the firm to knowledge of the fraud.
- Lawsuit targets law firm liability under RICO laws in the crypto space.
Silicon Valley law firm Fenwick & West is under fire as FTX investors have filed a lawsuit accusing the firm of playing a central role in the crypto exchange’s collapse.
The legal action, reported by Wu Blockchain on August 12, 2025, alleges that Fenwick knowingly assisted Sam Bankman-Fried in misusing customer funds, setting it apart from the 129 other firms linked to FTX. The lawsuit claims Fenwick designed corporate structures, including shell companies like North Dimension, to conceal the theft of hundreds of millions, a charge supported by the FTX bankruptcy examiner’s review of over 200,000 documents.
Key evidence includes testimony from Nishad Singh, FTX’s former engineering director, who pleaded guilty and cooperated with prosecutors. Singh revealed he informed Fenwick of the misuse of customer funds, improper loans, and false representations, alleging the firm advised on how to hide these acts. Caroline Ellison, ex-CEO of Alameda Research, further confirmed that customer funds were diverted to cover trading losses. The examiner’s report highlighted Fenwick’s “exceptionally close relationships” with FTX insiders, suggesting a level of involvement beyond routine legal advice.
The lawsuit marks a rare attempt to hold a law firm liable under the Racketeer Influenced and Corrupt Organizations Act (RICO), asserting that Fenwick’s Silicon Valley prestige helped legitimize FTX, enabling it to raise over $1.3 billion from investors despite insolvency risks. Critics argue proving culpability requires demonstrating actual knowledge and substantial assistance, a high bar in legal circles. However, the case has sparked debate about professional liability in the crypto sector, especially as the industry faces increased scrutiny post-2022.
As Bankman-Fried serves a 25-year sentence and appeals his conviction, this lawsuit could set a precedent for holding professional service firms accountable in crypto frauds. The outcome may reshape how law firms navigate the regulatory gray areas of cryptocurrency, making this a case to watch in the evolving landscape of digital finance.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. CoinCryptoNewz is not responsible for any losses incurred. Readers should do their own research before making financial decisions.
