Legal Industry Profits Soar as Cryptocurrency Bankruptcies Generate $700 Million in Fees
Summary:
Legal professionals have made over $700 million in fees from cryptocurrency bankruptcies. Cases involving major crypto firms like FTX and Celsius have generated significant revenue for lawyers, consultants, and accountants. The lack of clear regulations in the crypto industry has contributed to the complexity and high costs of these cases. The largest sum charged in crypto bankruptcy cases was $326 million for the FTX case. Despite concerns about legal fees, the United States bankruptcy court has deemed them reasonable. SBF's legal team is battling against the U.S. Department of Justice, while in China, a Bitcoin miner has been sentenced to life in prison, and the government is offering rewards for information on crypto firms.
The collapse of cryptocurrency firms like FTX and Celsius has proven to be a lucrative opportunity for the legal industry, with lawyers raking in hundreds of millions of dollars. A recent analysis by The New York Times reveals that lawyers, accountants, consultants, and other professionals have earned at least $700 million in fees from the bankruptcies of major crypto firms in the past year. This includes cases involving FTX, Celsius Network, Voyager Digital, BlockFi, and Genesis Global between July 2022 and July 2023. The figure is expected to increase significantly as more cases unfold, with Sam Bankman Fried’s trial scheduled for October. The largest sum charged in crypto bankruptcy cases is linked to the FTX case, with legal experts collecting a total of $326 million. Sullivan & Cromwell, the law firm managing FTX's bankruptcy, reportedly billed over $110 million in legal fees and $500,000 in expenses. Lack of clear cryptocurrency regulations has been a driving factor behind the high costs, as these cases have become more complex and time-consuming. Kirkland & Ellis, which is handling the bankruptcies of Celsius, Genesis, and Voyager, has charged $101 million for its services, along with $2.5 million in expenses. Alvarez & Marsal, a turnaround management firm, has reportedly earned over $125 million for its work related to FTX, Celsius, and Genesis. Initial reports in January 2023 had indicated that firms like Sullivan & Cromwell would profit substantially from their involvement in crypto bankruptcies. At that time, the firm had more than 150 individuals dedicated to the FTX case, including 30 partners whose rates exceeded $2,000 per hour. Due to concerns about excessive 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 company's November bankruptcy, and she deemed the fees reasonable. Meanwhile, SBF's legal team continues to challenge the U.S. Department of Justice, urging the court to dismiss recent requests made by the authority. These requests include a plea to prevent all seven of SBF's expert witnesses from testifying in court, some of whom could cost up to $1,200 per hour. Additionally, in Asia, a Bitcoin miner has received a life sentence in China, and the Chinese government is offering rewards for information leading to the capture of crypto firms.
Published At
9/5/2023 11:03:01 AM
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