The legal industry has reaped substantial financial gains from cryptocurrency collapses, generating over $700 million in fees from the bankruptcies of major crypto firms in the past year. Lawyers, accountants, and other professionals have benefited from the lack of clear cryptocurrency regulations, making these bankruptcy cases complex and expensive.
Winners in Crypto Bankruptcies
The FTX case has seen legal experts earn the most from cryptocurrency bankruptcies, with fees totaling $326 million. Sullivan & Cromwell, the law firm handling FTX’s bankruptcy, has charged over $110 million in legal fees. Kirkland & Ellis, managing bankruptcies for Celsius, Genesis, and Voyager, billed $101 million, while Alvarez & Marsal, a turnaround management firm, charged over $125 million for its work on FTX, Celsius, and Genesis.
The fees charged in crypto bankruptcy cases. Source: The New York Times
The lack of regulatory clarity in the cryptocurrency space has contributed to the complexity and duration of these bankruptcy cases. As a result, legal professionals have seen substantial earnings from handling these high-profile collapses.
Ongoing Legal Battles
The legal battles related to cryptocurrency bankruptcies continue, with Sam Bankman-Fried’s trial scheduled for October. The legal fees generated by these cases are expected to increase as they progress further.
Concerns have been raised about the high legal fees associated with cryptocurrency bankruptcies. In response, a fee examiner was appointed for the FTX case to ensure the reasonableness of the fees. Legal teams are also challenging the United States Department of Justice’s requests related to these cases.
The cryptocurrency industry continues to face challenges related to regulations. Clearer regulations could potentially simplify future bankruptcy cases and reduce legal costs.