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Bankrupt digital asset exchange, FTX has paid hundreds of millions in legal fees in a few months sparking reactions as creditors seek to recover their losses.
Court filings show that over $118 million were billed on the exchange between August and October for professional legal fees with investors and creditors yet to recoup their assets.
The latest expense comes to about $53,000 per hour and over $1.3 million per day on average, court filings show. Aside from lawyers, other professionals like accountants also have fees billed to the company during the bankruptcy proceeding.
Fees charged by firms
In one year of the bankruptcy proceedings, fees charged by Sullivan and Cromwell have been making rounds for months with diverse reactions among the crypto community.
In the marked three months, the firm has charged $31.8 million for professional services with an hourly rate of $1,230. The fees are broken down into electronic discoveries, paperwork, and other legal services.
While Sullivan and Cromwell billed $31.8 million, Alvarez and Marshall charged the highest at $35.8 million with a total fee of over 109 million. Quinn Emanuel charged $10.4 million in the same time frame while AlixPartners’ bill totaled $13.3 million.
FTX imploded in November 2022 with investor losses in billions leading to wider regulatory scrutiny and falling asset prices. The aftermath led to authorities seeking a way to prevent a repeat of the wider market horror recorded last year to protect investors in the market.
Several commentators opine that the FTX saga which led to a proliferation of legislations will protect investors better and at the same time limit a full-scale adoption as market sentiment will waver.
Bankruptcy fees accumulate
Recent crypto implosions from macroeconomic factors and internal policies have led to staggering legal and other professional charges at $700 million and counting.
A report by the New York Times shows how lawyers, accountants, and other professionals raked in $700 million in an unexpected “financial bonanza” amid the debacle.
Lawyers, accountants, and consultants make up professionals who have raked in over $700 million in fees following the collapse of several digital asset firms last year.#CryptoNews #Jobshttps://t.co/38buz0PpjL
— Cryptonews.com (@cryptonews) September 5, 2023
FTX remains on top of the ladder in terms of expenses with over $326 million after the exchange and sister company Alameda Research filed for bankruptcy last year.
According to the report, Alvarez and Marshall raked in $126 million with Sullivan and Cromwell at $111 million while Kirkland & Ellis billed $103 million. As fees ramp up in all bankruptcy cases, filings show increasing paperwork and complex processes alongside large manpower on active cases.
Despite this, creditors and victims lament the situation calling the fees charged excessive and unnecessary at the detriment of people who have lost their entire savings.
At the time Daniel Friesberg, a 19-year-old investor complained about the number of professionals assigned to cases “At every hearing, they have an army of people there, and most of them don’t need to be there. You don’t need 20 people taking notes.”
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