Former United States Securities and Exchange Commission (SEC) official John Reed Stark took to social media platform X (formerly known as Twitter) to highlight the fact that the lawyers representing bankrupt crypto exchange FTX are now rich beyond their dreams amid the restructure proceedings.
As reported earlier, the crypto empire founded by disgraced crypto entrepreneur Sam Bankman-Fried (SBF) is willing to let go of its 8% stake worth $1.4 billion in prominent artificial intelligence firm Anthropic.
On the other hand, the exchange has decided to give up on its plans for a reboot dubbed “FTX 2.0” and is now solely focused on the repayment of customers and creditors.
FTX Lawyers Robbing the Exchange
According to Stark, the FTX restructuring plan might be a way for the bankrupt firm’s legal team to profit from the procedure. He also added that all the customers of the exchange waiting for their money should receive a sarcastic “Thank You” note from the trading platform’s legal team, given the staggering profits they made during the course of the bankruptcy.
“One law firm handling the FTX bankruptcy will generate so much revenue that even if the firm took no other engagements last year, the firm would still rank among the 200 largest law firms in the U.S. All those fees to tell us what we already knew — that FTX should be liquidated and not reorganized,” Stark said.
Millions Made by Lawyers
As pointed out by Stark, “the FTX bankruptcy legal and other experts have charged an average of $1800 per hour ($2375 per hour for top law firm partners); have earned up to $1.5 million in fees per day; and have earned total fees to date of close to $250 million ($225 million reportedly through November 2023).”
Stark also added that the fees charged by the legal team is a “tad excessive” and noted that “a Chapter 11 plan seemed pure fantasy.”
FTX Reorganization was ‘Never Going to Happen’
Stark reiterated that the Chapter 11 reorganization of FTX was “never going to happen,” while sarcastically adding that each member of the legal team now has enough money to buy a beach house for themselves.
“It’s like attempting to reorganize a cross between Murder Incorporated, The Cali Drug Cartel and Madoff Investment Advisory Services,” Stark said.
FTX Goes Chapter 7 — and FTX Bankruptcy Lawyers Are Probably Heading to the Beach in 2024
The FTX bankruptcy team’s lawyers should send thank you notes to all FTX customers. Why? Because thanks to the FTX customers, each member of the FTX legal bankruptcy team can now probably… pic.twitter.com/P89w5tS54y
— John Reed Stark (@JohnReedStark) February 3, 2024
A Crypto Industry Trend
Sky-high legal fees have become a trend in the digital asset industry following the 2022 crypto winter and the collapse of multiple firms like Celsius Network, Voyager Digital, and the FTX crypto exchange.
As earlier reported, bankrupt firm Voyager Digital paid law firm Kirkland & Ellis a sum of $1.1 million as fees for its services in April 2023.
Further, Celsius also sold Israeli cybersecurity business GK8, which cost it $115 million for just $24 million to cover legal costs.