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Amid cryptocurrency downturns involving FTX and Celsius, the legal sector flourishes, raking in unprecedented revenues as lawyers navigate complex regulatory landscapes in high-profile bankruptcy cases.
A recent New York Times report and analysis reveal that lawyers, accountants, consultants, analysts, and other professionals have collected at least $700 million in fees from the bankruptcies of significant crypto firms within the past year. The figure encompasses the costs related to the crypto bankruptcy cases of FTX, Celsius Network, Voyager Digital, BlockFi, and Genesis Global between July 5, 2022, and July 31, 2023.
With the unfolding of these cases soon, this amount will likely expand significantly. Notably, the trial of Sam Bankman Fried is scheduled for October. The largest winners in the world of cryptocurrency bankruptcies are the legal experts involved in the FTX case.
Their total charges account for $326 million. Sullivan & Cromwell, the law firm responsible for managing FTX's bankruptcy, has reportedly billed over $110 million in legal fees, with an additional $500,000 in expenses.
According to Andrew Dietderich, the high costs can be attributed to the absence of clear cryptocurrency regulations, leading to increased complexity and time consumption. Kirkland & Ellis, the firm handling Celsius, Genesis, and Voyager bankruptcies, has billed $101 million for their services and $2.5 million in expenses. Alvarez & Marsal, a turnaround management firm, is reportedly charged over $125 million for their FTX, Celsius, and Genesis work.
Initial reports in January 2023 indicated that Sullivan & Cromwell would reap substantial profits from their involvement in crypto bankruptcy cases. At that time, the firm had more than 150 individuals dedicated to the FTX case, including 30 partners whose hourly rates exceeded $2,000.
To address concerns over these exorbitant fees, the United States bankruptcy court appointed Katherine Stadler as the fee examiner for the FTX case. In a June report, Stadler revealed that the FTX team had requested more than $200 million in fees since the November bankruptcy, deeming the charges reasonable.
Despite the increasing scrutiny, the legal industry thrives as cryptocurrencies face significant challenges. The lucrative nature of these cases has highlighted the immense financial opportunities available to legal professionals in this evolving sector.
Photo: Kanchanara/Unsplash
