Seeking Alpha 2023-06-21 19:33:02

Crypto exchange FTX already faces $200M in bankruptcy fees

The FTX ( FTT-USD ) bankruptcy has cost the collapsed cryptocurrency exchange over $200M in professional fees in just the seven months since filing for Chapter 11, a court-appointed examiner said in a recent filing. Lawyers, advisers and other professionals attempting to transform a "smoldering heap of wreckage" have garnered almost 35K billable hours by January 31. “These proceedings appear on track to be very expensive by any measure,” said bankruptcy attorney Katherine Stadler, noting the billed total for the first seven months of the case represents over 2% of reported estate assets and 10% of reported cash. Recall that FTX ( FTT-USD ) filed for Chapter 11 on Nov. 11, 2022, roiling the crypto industry and prompting increased regulatory scrutiny of the space, especially trading platforms. Since then, the company's new management, led by John J. Ray III, has been trying to settle its affairs and refund customers. “What makes these cases extraordinary, however, is the largely unregulated financial system in which the debtors (and other similar financial technology companies) operate, combined with their global scope, the complete absence of corporate records, and the non-existence of even the most basic corporate governance,” Stadler said. The 47-page filing showed that law firm Sullivan & Cromwell charged about $42M in fees and expenses over the first interim fee period of the case. And restructuring firm Alvarez & Marsal North America charged more than $28M. Firms that counsel other struggling crypto companies like Three Arrows Capital and BlockFi also stand to collect outsized legal fees. More on FTX and other high-profile downfalls FTX's Sam Bankman-Fried urges U.S. judge to dismiss most criminal charges FTT Token rockets 100% as crypto exchange FTX considers relaunch DCG's crypto lending subsidiary Genesis files for bankruptcy protection in New York Crypto ATM provider Coin Cloud files for bankruptcy, owes over $100M to Genesis