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The legal sector has emerged as a significant beneficiary during the downturns in cryptocurrency, such as those involving FTX and Celsius, amassing hundreds of millions of dollars for legal professionals.
Attorneys, accountants, consultants, analysts, and other specialists have accrued at least $700 million in fees from the insolvencies of prominent crypto companies over the past year, as reported by The New York Times.
This total encompasses the expenses incurred in the bankruptcy proceedings of five crypto entities — FTX, Celsius Network, Voyager Digital, BlockFi, and Genesis Global — from July 5, 2022, to July 31, 2023. The amount is expected to increase substantially as the legal matters progress, particularly with Sam Bankman Fried’s trial scheduled for October.
The fees charged in crypto bankruptcy cases. Source: The New York Times
Data indicates that the legal professionals engaged in the FTX case are the primary beneficiaries of the cryptocurrency bankruptcies, having billed a total of $326 million. The law firm Sullivan & Cromwell, overseeing FTX’s bankruptcy, has reportedly charged over $110 million in legal fees, along with $500,000 in expenses.
Andrew Dietderich has reportedly pointed out that the expenses are largely influenced by the absence of clear cryptocurrency regulations, which has rendered the cases more intricate and time-consuming.
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Kirkland & Ellis, which is managing the bankruptcies of Celsius, Genesis, and Voyager, has invoiced $101 million for its services, with $2.5 million in expenses, according to analysts from The New York Times. Alvarez & Marsal, a firm specializing in turnaround management, has reportedly billed over $125 million for its involvement with FTX, Celsius, and Genesis.
Related: SEC v. Ripple: Attorneys leave SEC side, both groups add new lawyers
Initial reports suggesting that firms like Sullivan & Cromwell would profit significantly from their work on crypto bankruptcies emerged in January 2023. At that time, the firm reportedly had over 150 personnel working on the FTX case, including 30 partners charging rates exceeding $2,000 per hour.
In response to concerns regarding elevated legal fees, the United States bankruptcy court appointed Katherine Stadler as the fee examiner for the FTX case. In June, Stadler reported that the team involved with FTX had requested more than $200 million in fees since the bankruptcy in November, asserting that the fees were justified.
Sam “SBF” Bankman-Fried’s legal representatives are actively contesting the United States Department of Justice, having requested the court on Sept. 1 to reject all recent motions from the authority. As previously reported by Cointelegraph, one of the DOJ’s motions included a request to prohibit all of SBF’s seven expert witnesses from testifying in court. Some of these witnesses could cost SBF up to $1,200 per hour for their testimony.
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