Coinspeaker
FTX Bankruptcy Fees Reach $53,000 per Hour, Crypto Exchange Still Owes Over $1B
The collapse of cryptocurrency exchange FTX, previously valued at $32 billion, has resulted in exorbitant legal and advisory fees amounting to an average of $53,000 per hour within three months.
According to recent filings with the bankruptcy court, FTX attempted to address its insolvency issues by spending an astounding $118.1 million on professional services between August 1 and October 31 of this year. This equates to more than $1.3 million every day, and the enormous costs don’t seem to be getting lower as the complicated bankruptcy procedures go on indefinitely.
The Main Beneficiaries of FTX Bankruptcy Spendings
Based on Cointelegraph’s report, among the beneficiaries of FTX’s post-bankruptcy filing moves, global consulting firm Alvarez & Marsal emerges as the largest, having charged $35.8 million for its services in managing the insolvency. Following closely behind is law firm Sullivan & Cromwell, which has billed FTX $31.8 million, with partner fees averaging $1,230 per hour.
Investigations into FTX founder Sam Bankman-Fried and other people and issues related to the company’s collapse also came at a high cost, with forensic accounting by AlixPartners totaling $13.3 million to date. Lawyers at Quinn Emanuel Urquhart & Sullivan, assisting with a criminal probe, have invoiced an additional $10.4 million. The remaining $26.8 million has been divided among various smaller law and advisory firms.
Transparency concerns have been raised by the court-appointed examiner, Katherine Stadler, regarding the enormous yet vague nature of the legal bills. Her report highlights wasteful practices such as overstaffed meetings, unexplained travel fees, and block-billing large time periods without specific task details. The billing report about Alvarez and Marsal stated:
“The Fee Examiner identified apparently top-heavy staffing, apparently excessive meeting attendance, fees related to non-working travel time, and various technical and procedural deficiencies with respect to some time entries (including vague and lumped entries). After an extensive exchange of information and discussion, the stipulated adjustments to fees and expenses are sufficient to address the Fee Examiner’s concerns, with no Reserved Issues.”
Estimates suggest that total legal costs could reach $350 million, which also significantly reduces the funds available for fair compensation to the thousands of customers and investors affected by FTX’s recklessness and potential fraud. The ongoing proceedings pose significant challenges in controlling expenses, but one can also argue that they help to ensure equitable resolutions, which will be fair enough to the defunct company’s leadership, its creditors, and every other party involved.
FTX Allegedly Still Owes More Than $1 Billion
Even with the owed fees it has paid in trying to deal with bankruptcy issues, FTX continues to face mounting challenges. Recent claims from the Internal Revenue Service (IRS) suggest that the collapsed crypto exchange owes $24 billion in unpaid taxes alone. When factoring in legal fees and client losses, estimations indicate that FTX’s overall liabilities could potentially exceed a staggering $1.4 billion.
The legal costs associated with Sam Bankman-Fried’s now-defunct cryptocurrency empire have been rising steadily without any apparent ceiling or end in sight as various experts examine its aftermath. As a result, FTX’s bankruptcy is turning into one of the most expensive company collapses in history—especially when it comes to cryptocurrencies. It is unclear how much more costly this might get and when a settlement will be reached in the end. These lingering questions can only be answered when there is a solution.
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FTX Bankruptcy Fees Reach $53,000 per Hour, Crypto Exchange Still Owes Over $1B