FTX Bankruptcy Legal Costs Surpass $53,000 per Hour

In a startling turn of events, the creditors of the FTX exchange have brought to the court's attention that the legal costs associated with the bankruptcy of FTX Group have exceeded the entire debt amount owed by the cryptocurrency platform to its investors.

Since the commencement of the proceedings, FTX has paid legal firms over $1.45 billion, according to disclosed claims for reimbursement. The fees owed to bankruptcy experts have now surpassed the $1.42 billion debt owed to FTX's clients.

"The fees charged by various legal consultants in the FTX bankruptcy case have reached an astonishing $50 million per month. It is alleged that hundreds of lawyers, financial consultants, and bankers are working on this case practically full-time. Every dollar spent on this matter essentially represents a dollar that creditors of FTX will not receive," warned Kris Hansen, a lawyer representing the interests of the company's creditors at Paul Hastings.

FTX's temporary administration has paid consulting firm Alvarez and Marshall a total of $36 million for just three months of work, while Sullivan & Cromwell received $32 million. Experts from Alixpartners demanded $13.3 million from FTX for forensic examinations, and Quinn Emanuel Urquhart received a fee of $10.4 million.

According to publicly available data, various legal firms leading the FTX bankruptcy case received no less than $118.1 million in compensation for legal expenses between August 1 and October 31, 2023. As a result, the total amount available for distribution among affected exchange creditors is decreasing at a rate of $53,300 per hour, as reported by Katherine Stadler, a court expert and official representative for Delaware bankruptcy cases.

Just before this development, FTX's temporary administration presented a new proposal for reimbursing clients and creditors. FTX's compensation plan includes the issuance of cash payments once the majority of assets held in cryptocurrency are liquidated.