In the crash of cryptocurrencies like FTX and Celsius, the legal industry emerged as a major winner, generating hundreds of millions of dollars for lawyers.
Lawyers, accountants, consultants, analysts and other professionals set Bankruptcies of major cryptocurrency companies have cost at least $700 million in the past year, according to a report and analysis by The New York Times.
The calculated amount includes fees collected in the bankruptcy cases of five crypto companies including FTX, Celsius Network, Voyager Digital, BlockFi and Genesis Global between July 5, 2022 and July 31, 2023. That number is likely to grow significantly as these cases are set to unfold in the near future, with Sam Bankman Fried’s trial scheduled for October.
Legal experts involved in the FTX case were the biggest winners of cryptocurrency bankruptcies, collecting a total of $326 million, according to the data. The law firm of Sullivan & Cromwell, which managed the FTX bankruptcy, reportedly took in more than $110 million in legal fees, in addition to $500,000 in expenses.
According to reports, Andrew Dietderich pointed out that the cost is mainly due to the lack of clear cryptocurrency regulations, which makes the case more complicated and time-consuming.
Kirkland & Ellis, which handled the bankruptcy cases of Celsius, Genesis and Voyager, has been charged $101 million for its work, including $2.5 million in expenses, The New York Times analyst said. Turnaround management firm Alvarez & Marsal reportedly took in more than $125 million in fees for its work on FTX, Celsius and Genesis.
related: SEC v. Ripple: Lawyers leave SEC, both sides add new lawyers
Some preliminary reports suggest that firms such as Sullivan & Cromwell are set to make huge fortunes from their cryptocurrency bankruptcy efforts. The firm reportedly had more than 150 people involved in the FTX case at the time, including 30 partners, at a rate of more than $2,000 an hour.
Concerned about high attorney fees, the US Bankruptcy Court appointed Katherine Stadler as fees examiner in the FTX case. In June, Stadler reported that since the November bankruptcy, the FTX crew had demanded more than $200 million in fees, which it said were reasonable.
SBF’s legal team continues to fight the DOJ, asking the court on Sept. 1 to dismiss all of the agency’s recent requests. As previously reported by Cointelegraph, one of the DOJ’s requests includes an appeal to bar all of SBF’s seven expert witnesses from testifying. Some witnesses can charge as much as $1,200 an hour for the SBF to testify.
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