A court-appointed bankruptcy examiner found that Fenwick & West was “deeply intertwined in nearly every aspect of FTX Group’s wrongdoing” — and now that finding sits at the heart of a $525 million federal lawsuit filed against the Silicon Valley law firm.Shell Companies And Deleted MessagesTwenty victims of the FTX collapse, coming from five countries, filed the complaint Wednesday in the US District Court for the District of Columbia.They say they lost their life savings when the exchange went under in November 2022, and that Fenwick’s involvement gave FTX a false sense of legitimacy that kept them from pulling their money out in time. Six individual defendants are named alongside the firm.The examiner’s conclusions came after a review of more than 200,000 documents in the federal bankruptcy proceedings.According to the lawsuit, the examiner found that Fenwick created corporate structures for both FTX and its sister trading firm Alameda Research, formed shell entities to hide money movements, and drafted backdated agreements to cover up illicit transfers.Two specific acts are described in detail. Reports indicate Fenwick attorneys set up North Dimension Inc., a Delaware shell company that posed as an electronics retailer while allegedly funneling over $3 billion in stolen customer funds.The firm also reportedly put in place FTX’s auto-delete messaging policy on the Signal app — the same system federal prosecutors say helped the fraud go undetected.A Witness From Inside FTXNishad Singh, FTX’s former Director of Engineering, adds another layer to the case. Singh pleaded guilty to fraud charges and testified against Sam Bankman-Fried at his criminal trial.According to the lawsuit, Singh told Fenwick attorneys directly that customer funds were being misused. Rather than walking away, the firm allegedly advised on how to conceal it.After FTX filed for bankruptcy, Fenwick quietly scrubbed all references to the exchange from its website. The firm also retained defense lawyers from Gibson Dunn before any civil lawsuit had been filed against it.Damages And Individual DefendantsThe plaintiffs are bringing seven claims, including malpractice, fraud, and gross negligence. They are seeking compensatory damages above $525 million, a return of all legal fees Fenwick collected from FTX, and punitive damages against two named partners — Tyler Newby and Daniel Friedberg — for what the complaint calls deliberate and reckless individual professional conduct.Meanwhile, Bankman-Fried’s own legal efforts have stalled. A federal judge last month rejected his bid for a new trial, dismissing his claims of new evidence as baseless.Judge Lewis Kaplan, who sentenced Bankman-Fried to 25 years in prison in 2024, said his arguments were “wildly conspiratorial and entirely contradicted by the record.”Featured image from WealthBuilders, chart from TradingView