FTX Bankruptcy Fees Surpass Amount Owed to Creditors

A recent court filing shows that defunct crypto exchange FTX is more indebted to its bankruptcy lawyers than its creditors.   

According to recent compensation filings, defunct crypto exchange FTX owes more funds to lawyers handling its bankruptcy case compared to the amount owed to creditors. 

Notably, legal experts handling FTX bankruptcy proceedings have charged the crypto exchange a whopping $1.45 billion since the proceeding started earlier this year. 

Surprisingly, the fees owed to these legal experts have surpassed the $1.42 billion FTX currently owes to customers. The development was also shared on the X (formerly Twitter) platform by Jameson Lopp, the Chief Technology Officer (CTO) at Casa.  

Latest numbers from the FTX bankruptcy are interesting:

Customer shortfall: $1.422 Billion
Bankruptcy fees: $1.45 Billion pic.twitter.com/FhCtFPeQ3z

— Jameson Lopp (@lopp) December 17, 2023

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Customers Lament High Legal Fees in Bankruptcy Proceeding  

It is worth noting that FTX creditors have been lamenting the rapid drain of cash from the exchange by bankruptcy lawyers. For these creditors, every dollar spent as legal fees in the bankruptcy proceeding will be subtracted from the entire funds retrieved. 

Between August 1 and October 31, lawyers handling the bankruptcy case have charged at least $118.1 million in legal fees. 

This suggests that the exchange owes at least $1.3 million daily or $53,300 per hour to these bankruptcy lawyers. The fees are being charged by the multiple legal firms handling the proceeding. 

Fees of Top Legal Firms Handling FTX Bankruptcy Proceeding

For instance, management consulting firm Alvarez and Marshall charged approximately $36 million in just three months for its service. In a similar development, Sullivan & Cromwell LLP billed FTX nearly $32 million throughout this duration. 

Furthermore, Alixpartners LLP charged FTX $13.3 million for its forensic expertise, and Quinn Emanuel Urquhart & Sullivan billed the exchange $10.4 million. 

According to a pseudonymous creditor of the exchange, FTX has successfully paid a total of $350 million since its bankruptcy proceeding began earlier this year. 

BTW @lopp this estimates $1.45B of remaining professional fees for a total of $1.8B. The Estate is currently charging $0.5B per year and bankruptcies are not short endeavors.

To date, here are the fees that have been petitioned in just under 1 year (~$350mm has been paid): https://t.co/fZhMyTE3B1 pic.twitter.com/5p6at5ZbWy

— Mr. Purple 🛡️ (@MrPurple_DJ) December 17, 2023

For context, FTX filed for Chapter 11 bankruptcy protection shortly in November 2022 shortly after it halted customers’ withdrawals amidst insolvency concerns.

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• Source: https://thecryptobasic.com/2023/12/18/ftx-bankruptcy-fees-surpass-amount-owed-to-creditors/?utm_source=rss&utm_medium=rss&utm_campaign=ftx-bankruptcy-fees-surpass-amount-owed-to-creditors