Cryptocurrency bankruptcy professionals and consultants from esteemed legal institutions have accrued a total of over $700 million in fees from noteworthy cryptocurrency bankruptcy proceedings.

In recent times, there has been a surge in substantial bankruptcy cases within the cryptocurrency realm. Notable cases include the crypto exchange FTX Trading Ltd owned by Sam Bankman-Fried, as well as Genesis Global Capital, BlockFi, Celsius, and Voyager Digital.

These high-profile bankruptcy cases have presented a lucrative opportunity for two prominent law firms heavily involved in the legal affairs: Sullivan & Cromwell and Kirkland & Ellis.

FTX Legal Team and Advisors Earnings Reach $700 million in Fees

Sullivan & Cromwell, currently overseeing the proceedings related to Sam Bankman-Fried's exchange, FTX Trading Ltd, stands out as the primary beneficiary. The Bahamas-based cryptocurrency exchange filed for bankruptcy in November 2022 after revelations of an $8 billion deficit in FTX's accounts due to a surge in customer withdrawals.

Reports indicate that FTX's bankruptcy process has generated over $500 million in fees for its legal representatives and advisors, leading to total costs skyrocketing. Administrators of the bankruptcy proceedings have requested a staggering $700 million in fees and expenses. While some fee requests have been reduced by 20%, others are pending approval.

Court filings reveal that the special counsel for the FTX estate, Sullivan and Cromwell, has been granted approval for $254 million in fees despite billing $360 million. Financial advisors Alvarez and Marsel follow with $133 million in approved fees.

Other legal firms and advisors, such as AlixPartners, Quinn Emanuel Urquhart and Sullivan, Perella Weinberg Partners, and Landis Rath and Cobb, have collectively billed $57 million.

FTX CEO John Ray III has invoiced $5.6 million hourly at $1,300, while RLKS Executive Solutions, the estate's chief officers, have submitted invoices totaling $26 million.

On a separate note, the Official Committee of Unsecured Creditors has accumulated $81 million in fees and $1.5 million in expenses, while the Ad Hoc Committee has requested less than $5 million in fees.

$120 million Earned by Counsel for Celsius, Voyager, BlockFi

Kirkland and Ellis have reportedly amassed over $120 million for their role as lead counsel in three major bankruptcy cases of crypto exchanges that filed for Chapter 11 during the height of cryptocurrency losses in 2022.

In January, Kirkland and Ellis filed their final fee application for the three bankruptcy cases, seeking $76 million for the Celsius case, significantly higher than the $27 million and $16 million garnered from the Voyager and BlockFi cases, respectively.

The total fees earned by the firm for these three cases amount to $120 million, with the Celsius case constituting the majority.

Celsius filed for bankruptcy in July 2022 following the collapse of TerraUSD and its digital currency, Luna. Voyager Digital initiated bankruptcy proceedings in July 2022, triggered by the insolvency of hedge fund Three Arrows Capital. BlockFi filed for bankruptcy in November 2022 after FTX, from which it held a $400 million credit line, also declared bankruptcy.

Thomson Reuters Institute data indicates that bankruptcy practices saw a 4.4% year-over-year demand growth in 2023, the highest among all legal practices, closely followed by a 3.2% growth in litigation.