Cryptocurrency crash generates hundreds of millions of dollars for lawyers
The legal industry has emerged as a major winner amid the crashes of cryptocurrencies such as FTX and Celsius, generating hundreds of millions of dollars for lawyers.
Lawyers, accountants, consultants, analysts and other professionals have collected at least $700 million in fees from the bankruptcies of major cryptocurrency companies over the past year, according to a report and analysis by The New York Times.
The calculated amount includes costs charged as part of the cryptocurrency bankruptcies of five cryptocurrency companies – FTX, Celsius Network, Voyager Digital, BlockFi and Genesis Global – from July 5, 2022 to July 31, 2023. This number is likely to grow. Significantly as cases develop in the near future, with Sam Bankman Fried’s trial looming in October.
According to the data, the legal experts involved in the FTX case are the biggest winners in crypto bankruptcies, earning a total of $326 million. The law firm Sullivan & Cromwell, which is managing the FTX bankruptcy process, has reportedly charged more than $110 million in legal fees, plus $500,000 in expenses.
Andrew Detderich reportedly noted that the costs are driven in particular by the lack of clear regulations for cryptocurrencies, which made the cases more complex and time-consuming.
Analysts at The New York Times said Kirkland & Ellis, which has been handling bankruptcies for Celsius, Genesis and Voyager, paid $101 million for its work, with expenses of $2.5 million. Alvarez & Marsal, a transformation management firm, has reportedly been paid more than $125 million for its work on FTX, Celsius, and Genesis.
Related: SEC v. Ripple: Lawyers Leave SEC, Both Groups Add New Lawyers
Some initial reports surfaced that companies like Sullivan & Cromwell would make a fortune in the cryptocurrency bankruptcy business in January 2023. The company reportedly had more than 150 people working on the FTX case at the time, including 30 partners with rates over 2,000. dollars an hour.
Amid concerns about rising legal fees, the US Bankruptcy Court has appointed Katherine Stadler as a fee investigator for the FTX case. In June, Stadler reported that the team working on FTX had demanded more than $200 million in fees since the November bankruptcy, stating that the fee was reasonable.
Sam “SBF” Bankman-Fried’s legal team continues to fight against the US Department of Justice, asking the court on September 1 to deny all of the agency’s latest motions. As previously reported by Cointelegraph, one of the DOJ’s requests included an appeal to prevent all seven SBF expert witnesses from testifying in court. Some SBF witnesses can cost up to $1,200 an hour to testify.
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