Crypto News – Cryptocurrency Bankruptcies: Legal Fees Reach Unprecedented Heights

Cryptocurrency Bankruptcies: Exorbitant Legal Fees in High-Profile Crypto Collapse Cases

Crypto News- The legal landscape surrounding cryptocurrency bankruptcies has witnessed a staggering surge in fees, with major law firms reaping substantial rewards from high-profile cases.

Genesis Global Capital’s Bankruptcy Filing

In recent times, the cryptocurrency market has seen significant turbulence, leading to the bankruptcy filings of prominent entities such as FTX Trading Ltd, Genesis Global Capital, BlockFi, Celsius, and Voyager Digital. This wave of bankruptcies has presented a lucrative opportunity for legal professionals, particularly those at Sullivan & Cromwell and Kirkland & Ellis, who have emerged as key players in these proceedings.

Sullivan & Cromwell’s Dominance in FTX Trading Ltd Bankruptcy

Sullivan & Cromwell, spearheading the case involving FTX Trading Ltd, stands to gain the most from the fallout. Following FTX’s bankruptcy filing in November 2022, which unveiled an $8 billion deficit, reports indicate that legal and advisory fees have surpassed $500 million. The total costs, including expenses, have ballooned to a staggering $700 million, albeit subject to adjustments and approvals. Sullivan & Cromwell, serving as special counsel to the FTX estate, has secured approval for $254 million in fees, despite initially billing $360 million. Other entities such as Alvarez and Marsel, AlixPartners, Quinn Emanuel Urquhart and Sullivan, Perella Weinberg Partners, and Landis Rath and Cobb, have collectively charged $57 million for their services.

Meanwhile, Kirkland & Ellis has capitalized on its role as lead counsel for multiple crypto exchanges navigating Chapter 11 proceedings. Notably, the firm has filed fee applications totaling over $120 million for its involvement in the Celsius, Voyager, and BlockFi cases. The Celsius bankruptcy, triggered by the collapse of TerraUSD and Luna, saw Kirkland & Ellis seeking $76 million in fees, dwarfing the amounts requested for the Voyager and BlockFi cases.

Cryptocurrency Bankruptcy Cases Drive Demand for Legal Services

The surge in cryptocurrency bankruptcy cases has significantly bolstered the demand for legal services in this niche area. Thomson Reuters Institute data reveals a 4.4% year-over-year growth in bankruptcy practices in 2023, outpacing other legal domains such as litigation. As the cryptocurrency market continues to evolve, legal firms are poised to play a pivotal role in navigating the complexities of financial distress within this burgeoning industry.

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