I hope you are all well and are having an excellent week, welcome to CryptoGod-1’s blog on all things crypto. Today I am back looking at that exchange we all love to hate, the one and only FTX. It has emerged that the lawyers and consultancy firms have made quite a handsome sum from charging for their services over the last five months, while users of the exchange still patiently (or not) wait to hear whether or not they will get access to their lost funds.
There have been a number of consultancy firms and lawyers handling the bankruptcy case of FTX, and in total the collapsed exchange has been exchange over $145 million for their five-month services. This emerged via court filings, filed on the 28th of April 2023, involved the following companies in the case:
Law Firms:
Sullivan & Cromwell
Landis Rath & Cobb
Quinn Emanuel Urquhart & Sullivan
Management Consulting Firms:
Alvarez & Marsal North America
AlixPartners
Sullivan & Cromwell
The law firm Sullivan & Cromwell (S&C) charged $69,304,890 for its five-month services to the bankrupt exchange, as shown in the court filing below.
From the off big fees were being charged, with compensation of $9.5 million required within the first month of service. This has been described by S&C as “one of the most complicated, multi-disciplinary exercises by any law firm.”
From there, the fees kept rising, with subsequent fees all reaching into the double digits in million of dollars. They charged FTX $15.4 million for its services in December 2022 and have charged the exchange $27,512,580.6 so far for their work this year.
According to S&C, 80% of the charges were “actual, reasonable and necessary.” They have also claimed to have incurred an additional $450,000 in expenses for their work during the five month period.
However, it is important to note that from the off their were complication with S&C being involved in the case. FTX founder Sam Bankman-Fried has previously accused the law firm of pressuring him to file for bankruptcy, which he claimed were due to the excessive fees they could earn from it. There was also objections from four separate U.S. lawmakers, stating a conflict of interest over its previous relationship with the bankrupt exchange. New acting CEO for FTX, John Ray, decided the law firm was more than adequate and their services were essential to safeguard the best interest of FTX and its stakeholders.
Alvarez & Marsal North America
Working as a financial advisor to FTX, the firm Alvarez & Marsal has charged the bankrupt exchange $53,129,184.5 for its services between November 2022 and March 2023, as shown from the court filing below.
For the opening two months of their services, the consultancy charged over $15 million. Following on from there, they have charged $37.5 million for its services in 2023. During this period of work they also claim to have incurred an additional expense of $1.4 million.
Some of their services, according to the court filing, included avoidance actions, financial analysis, business operations, due diligence, and accounting procedures. They have claimed, similar to S&C, that 80% of the charges were “actual, reasonable and necessary.”
Remaining Fees
Of the other remaining firms, such as Landis Rath & Cobb, Quinn Emanuel Urquhart & Sullivan, and AlixPartners, they managed to charged a combined total of around $21 million for their services.
Landis Rath & Cobb are known to have charged FTX a total of $3.04 million for their services, with the court having approved a total of $1.9 million and its additional expenses of $47,257.
The Law firm Quinn Emanuel Urquhart & Sullivan charged FTX $8.95 million for its five months of service, and within the firm incurred an additional expense of $11,854.
The management consulting firm AlixPartners is said to have charged the bankrupt exchange $10.6 million, out of which $4.97 million has been paid. The firm added that FTX paid $35,353 from its $107,638 incurred expenses.
Certainly some lavish fees for the legal teams involved in this case. While it is understandable for a case of this nature and size, it is also somewhat a slap in the face for those who are out of pocket over the actions of FTX. Hopefully they will get their lost / stolen crypto returned to them sooner rather than later.
Have a great day.
CryptoGod-1.
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