FTX Owes More to Lawyers Than Creditors in Bankruptcy Case

The beleaguered cryptocurrency exchange FTX has found itself owing more to its bankruptcy lawyers than to its own creditors. Recent court filings have revealed that the legal fees incurred during the ongoing bankruptcy proceedings have exceeded the amount owed to the platform’s customers.

Surging Legal Costs Amidst FTX Bankruptcy Proceedings

Since the onset of its bankruptcy case earlier this year, FTX has been inundated with legal fees totalling $1.45 billion. This figure starkly contrasts with the $1.42 billion owed to the exchange’s customers. The details of these expenses have been meticulously tracked and reported, highlighting the intensive and costly nature of the bankruptcy process.

The legal teams involved have charged FTX significant amounts over a short period. Between August and October, the exchange was billed at least $118.1 million in legal fees. This rate translates to an average of $1.3 million per day, or about $53,300 per hour. Such high costs have raised concerns among FTX’s creditors, as these expenses directly impact the available funds for reimbursement.

A Breakdown of Legal and Consulting Fees

Several high-profile legal and consulting firms are involved in the FTX bankruptcy case, each billing substantial amounts for their services. Alvarez and Marshall, a management consulting firm, charged around $36 million for three months of service. Following closely, Sullivan & Cromwell LLP billed nearly $32 million over the same period. Other firms like Alixpartners LLP and Quinn Emanuel Urquhart & Sullivan have also charged millions for their specialized services.

These escalating legal fees have become a significant point of contention for FTX’s creditors. As the legal costs mount, the potential recovery for those owed money by the exchange diminishes. This situation has placed additional pressure on the ongoing proceedings, as every dollar spent on legal fees reduces the total funds available for creditor reimbursement.

Despite these challenges, FTX has managed to pay out a total of $350 million since the beginning of its bankruptcy proceedings. This figure, although substantial, is overshadowed by the growing legal expenses, which continue to accrue as the case progresses.

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