FTX Paying More Legal Fees Than The GDP Of A Small Island

The closing down process of cryptocurrency exchange FTX FTT/USD is anticipated to come with an astronomical price tag as professional fees have already surpassed $200 million, according to a court document submitted on Tuesday by a court-appointed examiner.

Katherine Stadler, an attorney specializing in bankruptcy and was assigned in March to monitor the fees, disclosed attorneys and other professionals accumulated nearly 35,000 billable hours as of the end of January. This is comparable to four years of continuous work.

“Very few firms could have accomplished what these professionals accomplished in 90 days … transforming a smoldering heap of wreckage into a functioning Chapter 11 debtor-in-possession,” Stadler said, characterizing the phase right after the bankruptcy announcement as “an ‘all hands on deck’ crisis.”

"These proceedings appear on track to be very expensive by any measure,” she added, pointing out that the expenses already constituted 2% of the assets in the estate and 10% of the available cash. She noted 46 out of the 242 attorneys engaged in the case were billing more than $2,000 per hour.

In her statement, Stadler also highlighted the exceptional nature of this case, stating, "What makes these cases extraordinary… is the largely unregulated financial system in which the Debtors (and other similar financial technology companies) operate.”

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She referred to the “nonexistence of even the most basic corporate governance” within FTX, which was co-founded by Sam Bankman-Fried, a depiction that coincides with criticism made by FTX's new CEO, John J Ray III.

Though generally satisfied, Stadler recommended that some of the fees be reduced and requested the principal legal counsel, Sullivan & Cromwell, cut its $42 million invoice by around $650,000 due to issues including overstaffing, excessive meetings and ambiguous documentation.

Meanwhile, Ray has been striving to bring resolution to FTX’s matters after its collapse in November.

Some of his submissions imply endeavors to revive operations under the name FTX 2.0.

A request by the U.S. government for an independent, more comprehensive examination into the reasons behind FTX’s failure has been forwarded to the Court of Appeals.

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