The dismantling of FTX, a major cryptocurrency exchange, is piling up legal bills of up to $1.5 million per day, creditors say. At a bankruptcy hearing on Wednesday, the creditors’ committee decried the current rate of spending. “They’ve now moved to a pace of almost $50 million a month in fees, with literally hundreds of lawyers, financial advisors, and bankers working on them practically full time,” said Kris Hansen, a lawyer from Paul Hastings representing the creditors’ committee. “Every dollar spent in the case is essentially a dollar that creditors don’t receive.”
A report filed two months ago by a fee examiner who worked for another law firm that looked at the charges in the first seven months of the case – totaling $200 million – noted the fees were “remarkable,” but it also praised the professionals digging through the “smoldering heap of wreckage” to recover creditors’ money.
The staggeringly complex bankruptcy is also complicated by the necessary side negotiations with other collapsed crypto giants, such as the recent deal with Genesis that FTX’s Alameda Research could claim $175 million in that company’s bankruptcy. And the books at FTX were notoriously problematic from the start, with FTX’s Chief Executive Officer John J. Ray III – the person in charge of the wind-down – having said the records were riddled with lies and obfuscation from the previous FTX management.
The representatives of the bankrupt exchange insist they’ve worked “tirelessly” and that the process remains on track. But Hansen – who argued the process to potentially reignite an FTX 2.0 is dragging and overly secretive – also said the debtors’ group hasn’t made enough of an effort to maximize returns on the company’s cash and crypto assets while the case goes on. “Every day counts,” he said.