July 16, 2024
Legal and consulting professionals earn $700 million from crypto bankruptcies
Latest Cryptocurrency News

Crypto Bankruptcy Bonanza: Lawyers, Consultants Pocket $700 Million Amid Market Turbulence

The legal industry has reaped significant rewards amid the cryptocurrency market downturn, with lawyers, accountants, consultants, analysts, and other professionals collectively earning over $700 million in fees from the bankruptcies of major crypto firms over the past year. This substantial amount accounts for the costs associated with the bankruptcy cases of five crypto firms, including FTX, Celsius Network, Voyager Digital, BlockFi, and Genesis Global, spanning from July 5, 2022, to July 31, 2023.

Notably, the FTX case stands out, with legal experts in this matter securing the largest share of earnings, totaling $326 million. Sullivan & Cromwell, the law firm overseeing FTX’s bankruptcy, has reportedly billed over $110 million in legal fees, in addition to $500,000 in expenses.

The complexity and time-consuming nature of these cases, exacerbated by the absence of clear cryptocurrency regulations, have driven up costs significantly. Kirkland & Ellis, responsible for handling the bankruptcies of Celsius, Genesis, and Voyager, has invoiced $101 million for its services, along with $2.5 million in expenses. Alvarez & Marsal, a turnaround management firm, has charged more than $125 million for its work on FTX, Celsius, and Genesis.

Reports indicating substantial earnings for firms like Sullivan & Cromwell emerged as early as January 2023, with the firm deploying a sizable team, including 30 partners with hourly rates exceeding $2,000, for the FTX case.

Despite concerns about the high legal fees, the United States bankruptcy court appointed Katherine Stadler as the fee examiner for the FTX case. In June, Stadler reported that the FTX team had requested over $200 million in fees since the November bankruptcy, deeming these fees reasonable.

Sam “SBF” Bankman-Fried’s legal team is actively contesting the United States Department of Justice’s requests, including an appeal to bar all seven of SBF’s expert witnesses from testifying in court, some of whom could demand up to $1,200 per hour for their testimony.

Image by freepik

Disclosure Statement: Miami Crypto does not take any external funding, or support to bring crypto news to the readers. We do not have any conflicts of interest while writing news stories on Miami Crypto.

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