At the end of 2022, the crypto exchange FTX went bankrupt. It was the industry’s largest bankruptcy and its effects are still felt today. The bankruptcy proceedings are still ongoing. But according to the new CEO, the old legal department had a huge influence on the company, enough to make it financially strong.
Lawyers FTX have made a lot of money
CEO John Reed Stark describes in a detailed post on the social media platform X that FTX’s former bankruptcy lawyers benefited significantly from the lawsuit. Thanks to the extremely high legal fees, according to Stark, they all have enough money to buy a house.
FTX is heading to Chapter 7 – and FTX’s bankruptcy lawyers will likely hit the beach in 2024
FTX bankruptcy team lawyers should send thank you letters to all FTX customers. Why? Because thanks to FTX customers, every member of the FTX insolvency team can now… pic.twitter.com/P89w5tS54y
— John Reed Stark (@JohnReedStark) February 3, 2024
This team charged an average of $1,800 per hour for Chapter 11 bankruptcy and up to $2,375 per hour for the top attorneys. Together they are said to have demanded up to 1.5 million US dollars per day. By November 2023, they would have withdrawn $225 million from FTX’s coffers.
Stark emphasizes that he is not a bankruptcy lawyer and that he would like good lawyers to earn enough for their hard work, but he considers these costs to be extreme despite the situation at FTX. With these costs, the restructuring plan would even be “pure fantasy”.
“FTX 2.0” will be discontinued, but the sale of crypto will be
Unfortunately, late last month, FTX announced that it was completely abandoning its plan to relaunch the trading platform. Both the costs and the risks would be too high. FTX’s own altcoin, FTT, plunged more than 30% following this news. This plan took shape at the beginning of 2023, but the big hole in the balance sheet caused problems even then.
Meanwhile, the rest of FTX continues to sell assets to pay back its customers. FTX is one of the creditors of Genesis, which is also bankrupt but recently decided to sell its $175 million in claims.
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