Last year’s decline in cryptocurrency prices led to the bankruptcy of several major firms and a government crackdown, resulting in the loss of savings for inexperienced investors. However, for a select group of corporate turnaround experts, the collapse of the crypto market has proved to be a financial windfall. Lawyers, accountants, consultants, cryptocurrency analysts, and other professionals have earned over $700 million in fees from the bankruptcies of five major crypto firms, including FTX, according to an analysis by The New York Times. These fees are expected to increase as the cases progress.
Large fees are common in corporate bankruptcies due to the complex and time-consuming legal work involved in unraveling financial affairs. However, the exorbitant fees associated with crypto bankruptcies have sparked outrage, as many of the investors who lost money were amateurs and individuals who trusted these companies with their personal savings. Each dollar in fees charged deducts from the funds that will eventually be returned to the creditors.
The analysis conducted by The Times involved studying thousands of pages of billing statements and court documents from the bankruptcies of FTX, Celsius Network, Voyager Digital, BlockFi, and Genesis Global. The findings revealed that two major law firms, Sullivan & Cromwell and Kirkland & Ellis, were among the biggest beneficiaries, charging millions of dollars for their work on these cases. Additionally, more than 50 other professionals, including specialized start-ups, accountants, consultants, and investment bankers, profited from these bankruptcies.
The high costs involved in these bankruptcies reflect the broken promises of the crypto industry, which was positioned as a means for equalizing the finance world. However, as the industry struggled to recover from the crisis, traditional power brokers such as lawyers and bankers were able to profit significantly. The fees associated with these bankruptcies have garnered intense scrutiny from the crypto community, with many individuals investing countless hours in analyzing billing statements made available to the public.
Lawyers and other bankruptcy professionals argue that their charges are justified as they are charging market rates for complex and time-consuming work that will ultimately help recover lost funds. However, critics argue that the fees are excessive and unnecessary. Creditors have raised concerns about the hourly rates charged, as well as the expenses claimed by the professionals involved.
Over the past few decades, corporate bankruptcy has become a lucrative business, with professionals charging increasingly higher hourly rates. In the case of crypto bankruptcies, the fees have reached new heights. The average hourly rate for bankruptcy lawyers at Sullivan & Cromwell has surged to $2,000 this year, up from $1,300 in 2018.
When the crypto market crashed last year, companies like Celsius and Voyager were the first casualties, resulting in billions of dollars in losses for investors. FTX’s failure wiped out billions in user funds. Lawyers, accountants, and consultants immediately stepped in to handle the bankruptcies. While some bankruptcy judges have appointed fee examiners to monitor costs and eliminate unnecessary spending, creditors have demanded more aggressive cost-cutting measures.
The fee debate has actually increased the costs associated with these bankruptcies in some cases. Kirkland & Ellis, for example, drew criticism from investors when it billed nearly $100,000 for considering a possible lawsuit against a creditor who had obtained leaked information about the bankruptcy process. Critics argue that the fees charged by professionals do not align with the losses suffered by investors.
In conclusion, the collapse of the cryptocurrency market led to significant bankruptcies, with professionals in various fields profiting from the fees associated with handling these cases. While some argue that the fees are justified due to the complex nature of the work involved, others believe they are excessive, particularly considering that many of those who lost money were individual investors. Criticism and scrutiny from the crypto community have shed light on the need for more transparency and accountability in the bankruptcy process.
Denial of responsibility! VigourTimes is an automatic aggregator of Global media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, and all materials to their authors. For any complaint, please reach us at – [email protected]. We will take necessary action within 24 hours.
