FTX has paid out more than $670 million to consultants and lawyers since bankruptcy began.
Date: 2024-05-31 Author: Oliver Abernathy Categories: BUSINESS
Cryptocurrency exchange FTX, which is in the process of bankruptcy, has spent significant sums on fees for lawyers, consultants and new management. These costs amounted to more than $670 million, raising concerns among creditors and affected customers.
General expenses for consultants and lawyers
Since November 2022, when FTX filed for bankruptcy, the company has paid a total of $672.5 million in fees to lawyers, consultants and new management. These data were made public by one of the company's affected investors, acting under the pseudonym Mr. Purple. He noted that the real amount of payments significantly exceeds the $500 million previously announced in the media.
Leaders in terms of payment volumes
The law firm Alvarez and Marsal and the agency Sullivan and Cromwell were the main recipients of the payments. Since November 2022, Alvarez and Marsal received $198.2 million, and Sullivan and Cromwell - $194 million. However, data from The Block, which operates documents from the Kroll Inc organization, provides other figures: $133 million for Alvarez and Marsal and $254 million for Sullivan and Cromwell .
Share of costs for lawyers and consultants
According to Mr. Purple, the share of lawyers and consultants is 88% of the total commissions paid. The largest payouts occurred in March 2023, when almost $50 million was spent. Mr. Forecast. Purple indicates that the total settlement will exceed $1 billion before compensation payments begin to be made to affected customers and creditors.
Problems with Sullivan and Cromwell
Notably, a class action lawsuit was filed against the Sullivan and Cromwell agency. Some FTX clients claim the agency was involved in fraudulent exchange practices, adding to their grievances.
New York Times report
In September 2023, the New York Times published a report estimating that bankruptcy lawyers and consultants made more than $700 million from the collapse of cryptocurrency companies, including FTX. These figures highlight the scale of financial losses and the high level of costs incurred by insolvency practitioners.
The situation surrounding FTX and the significant payments to lawyers and consultants raise serious questions for creditors and affected clients. Amounts paid for legal and advisory services have already exceeded $670 million, and are projected to exceed $1 billion. This raises important questions about the allocation of funds and priorities in the company's bankruptcy process, leaving affected clients and creditors waiting for fair compensation.
