Legal fees have soared in high-profile crypto losses.
Cryptocurrency bankruptcy attorneys and consultants at major law firms have collected over $700 million in fees in high-profile cryptocurrency bankruptcy cases.
Sam Bankman-Fried's crypto exchange FTX Trading Ltd, as well as Genesis Global Capital, have seen several major bankruptcy cases in recent years, including Blockchain, Celsius and Voyager Digital.
These high-profile bankruptcy cases have become lucrative opportunities for two major law firms involved in litigation: Sullivan & Cromwell and Kirkland & Ellis.
FTX's attorneys, advisors have filed a $700 million settlement.
Sullivan & Cromwell, currently the head of Sam Bankman-Fried's exchange, FTX Trading Ltd, is set to be the biggest winner. The Bahamas-based cryptocurrency exchange revealed an $8 billion deficit in FTX accounts in November 2022 following a surge in customer withdrawals.
According to reports, FTX's bankruptcy resulted in more than $500 million in fees to its lawyers and consultants, with total costs rising. Bankruptcy administrators have demanded a staggering $700 million in fees and expenses. While some of these requests have been reduced by 20%, others are still awaiting approval.
According to the court filing, FTX Estates' special counsel Sullivan & Cromwell paid $360 million but received approval for a $254 million settlement. Financial advisors Alvarez & Marcel followed with $133 million in approved fees.
Other firms and consultants, including Alix Partners, Quinn Emanuel Urquhart & Sullivan, Perella Weinberg Partners and Lands Rath & Cobb, paid a combined $57 million.
FTX CEO John Ray III was billed $5.6 million at $1,300 an hour, while RLKS Executive Solutions, the property's chief executive, billed $26 million.
Separately, the Official Committee of Unsecured Creditors ordered $81 million in fees and $1.5 million in costs, while the ad hoc committee sought less than $5 million in fees.
$120 million for Celsius, Voyager, BlockFi Advisor
According to Bloomberg, Kirkland and Ellis in 2011 They earned more than $120 million in their roles as lead counsel for three major crypto exchanges that filed for Chapter 11 in 2022 during the peak of cryptocurrency bankruptcy.
In January, Kirkland & Ellis filed for a final settlement of three bankruptcy cases, seeking $76 million in the Celsius case, up from $27 million and $16 million in the Voyager and Blockchain cases, respectively.
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The company's total payout for the three cases is $120 million, with the Celsius case accounting for the majority.
Celsius filed for bankruptcy in July 2022 after the collapse of TerraUSD and its digital currency, Luna. Voyager Digital after bankruptcy fund Three Arrows Capital filed for bankruptcy in July 2022. BlockFi filed for bankruptcy in November 2022 after FTX, from which it had a $400 million credit line, also filed for bankruptcy.
According to Thomson Reuters Institute data, bankruptcy practices will see 4.4% year-over-year demand growth in 2023, the highest of all practices, followed by litigation at 3.2%.
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