In recent years, significant bankruptcies in the cryptocurrency space have proven to be highly lucrative for two prominent law firms involved in the legal proceedings: Sullivan & Cromwell and Kirkland & Ellis.
Cryptocurrency bankruptcy attorneys and advisors at major law firms have accumulated over $700 million in fees from handling significant cryptocurrency bankruptcy cases.
Several noteworthy bankruptcy cases have unfolded in recent years, involving entities such as Sam Bankman-Fried’s crypto exchange FTX Trading Ltd, Genesis Global Capital, BlockFi, Celsius, and Voyager Digital.
These high-profile bankruptcy proceedings have presented a profitable opportunity for two leading law firms engaged in the legal process: Sullivan & Cromwell and Kirkland & Ellis.
FTX Legal Teams Reap $700 Million in Fees
Sullivan & Cromwell, currently overseeing the bankruptcy case of Sam Bankman-Fried’s FTX Trading Ltd exchange, stands to benefit the most. The Bahamas-based cryptocurrency exchange filed for bankruptcy in November 2022 after revealing an $8 billion deficit in its accounts due to a surge in customer withdrawals.
Reports indicate that FTX’s bankruptcy has generated over $500 million in fees for its legal teams and advisors, with total expenses soaring. Administrators of the bankruptcy process have requested an astounding $700 million in fees and expenses. While some of these requests have been reduced by 20%, others are still pending approval.
According to court filings, Sullivan and Cromwell, serving as special counsel for the FTX estate, have been approved for $254 million in fees despite billing $360 million. Financial advisors Alvarez and Marsel follow with $133 million in approved fees.
Other firms and advisors, including AlixPartners, Quinn Emanuel Urquhart and Sullivan, Perella Weinberg Partners, and Landis Rath and Cobb, have collectively billed $57 million.
FTX CEO John Ray III has invoiced $5.6 million hourly at a rate of $1,300, while RLKS Executive Solutions, the estate’s chief officers, have billed $26 million.
Additionally, the Official Committee of Unsecured Creditors has incurred $81 million in fees and $1.5 million in expenses, while the Ad Hoc Committee has requested less than $5 million in fees.
$120 Million for Celsius, Voyager, BlockFi Counsel
According to a report by Bloomberg, Kirkland & Ellis has likely earned over $120 million for its role as lead counsel in three major crypto exchange bankruptcies during the peak of cryptocurrency losses in 2022.
In January, Kirkland & Ellis submitted its final fee application for three bankruptcy cases, seeking $76 million for the Celsius case, significantly higher than the $27 million and $16 million earned from the Voyager and BlockFi cases, respectively.
Summary Review: The soaring costs associated with cryptocurrency bankruptcies highlight the financial implications and complexities inherent in managing these high-profile cases. As stakeholders navigate the aftermath of such insolvencies, legal expertise remains paramount in charting a path forward amidst the evolving cryptocurrency landscape.
Disclaimer: Remember that nothing in this article and everything under the responsibility of Web30 News should be interpreted as financial advice. The information provided is for entertainment and educational purposes only. Investing in cryptocurrency involves inherent risks and potential investors should be aware that capital is at risk and returns are never guaranteed. It is imperative that you conduct thorough research and consult with a qualified financial advisor before making any investment decision.
