Fenwick & West, the Silicon Valley-based law firm that once represented the now-defunct cryptocurrency exchange FTX, is vehemently denying claims that it played a crucial role in the multibillion-dollar fraud that led to the exchange's collapse. The law firm is facing a barrage of accusations, including allegations of designing corporate structures that facilitated the misuse of customer funds, assisting in the creation of shell companies to obscure transactions, and even advising FTX executives on how to conceal their wrongdoings.

The accusations against Fenwick & West have intensified following the criminal trial of FTX co-founder Sam Bankman-Fried and the ongoing bankruptcy proceedings. Plaintiffs in a class-action lawsuit are seeking to amend their complaint, citing new evidence that allegedly reveals the firm's deep involvement in the "most important aspects" of how the FTX fraud was carried out. The lawsuit singles out Fenwick & West as the only firm accused of knowingly participating in the fraud among more than 130 firms linked to FTX.

According to court filings, Fenwick & West is accused of designing corporate entities with no safeguards, enabling FTX to divert billions in customer assets to its sister trading firm, Alameda Research. The firm is also alleged to have set up shell companies like North Dimension to obscure transactions, drafted backdated agreements to justify illicit transfers, and approved intercompany loans secured by customer funds.

Adding to the severity of the allegations, Fenwick & West is accused of authoring the encrypted communications policy that allowed messages on platforms like Signal to disappear, effectively covering the tracks of FTX executives. The firm is also accused of creating auto-deleting chat channels for executives and engaging in other practices that regulators later described as obstruction.

Testimonies from former FTX insiders, including Nishad Singh, Gary Wang, and Caroline Ellison, have further implicated Fenwick & West. Singh, FTX's former engineering director, testified that he personally informed Fenwick about the misuse of customer funds and false disclosures, claiming that the firm responded not with warnings but with guidance on how to hide the wrongdoing.

In response to these allegations, Fenwick & West has consistently denied any wrongdoing, insisting that it acted within the scope of its legal representation. In a motion to dismiss filed in 2023, the firm argued that attorneys cannot be held liable for a client's misconduct when their actions fall within their professional role. The firm maintains that the accusations are based on "false and misleading allegations" and has urged the court to reject the plaintiffs' attempt to amend their complaint. A spokesperson for Fenwick & West stated that the examiner's report did not include any finding of wrongdoing on Fenwick's part.

The legal battle has sparked broader discussions about professional liability in the crypto industry. Legal analysts have compared the case to the Enron scandal, where law firms faced similar scrutiny for enabling fraudulent schemes. A ruling against Fenwick & West could set a precedent for attorney liability in the digital asset space, reshaping how law firms approach high-risk clients. For FTX's creditors, the outcome could influence how much more, if anything, can be recovered from the wreckage.