FTX lawyers to reap millions from the bankruptcy case: Report

Controversial instrumentality steadfast Sullivan & Cromwell is connected way to reap a luck from its enactment connected the bankruptcy lawsuit of the FTX cryptocurrency exchange, according to a caller report.

Sullivan & Cromwell’s costs successful the FTX lawsuit are estimated to scope hundreds of millions of dollars earlier the firm’s bankruptcy probe is over, Bloomberg Law reported connected Jan. 27.

As the FTX proceedings is scheduled for October 2023, the firm’s lawyers present person astir 8 months to untangle the analyzable FTX case, which volition outgo a batch of clip and money. Sullivan & Cromwell has much than 150 radical moving connected the FTX case, including 30 partners with rates exceeding 2,000 per hour. Associates are charging up to astir $1,500 per hour, the study notes, citing a tribunal filing.

Source: Bloomberg Law

In a tribunal declaration, Sullivan & Cromwell said that its projected fees are successful accordance with marketplace rates by different starring instrumentality firms and really correspond a discount from the rates utilized successful non-bankruptcy matters.

Bankruptcy experts person been facing a precocious request arsenic the crypto wintertime of 2022 generated a large fig of bankruptcy filings, including those by large crypto firms similar Genesis, Celsius Network and Voyager Digital.

According to Jonathan Lipson, a Temple University instrumentality professor, lawyers are going to bash precise good successful cases similar FTX, “just arsenic the professionals person done precise good successful different large cases.” For example, New York-based instrumentality steadfast Weil Gotshal made astir $500 cardinal successful fees from the bankruptcy of Lehman Brothers successful 2008.

Lipson said that specified large expenses tin beryllium justified arsenic Sullivan & Cromwell tin perchance assistance investigators retrieve wealth from FTX, stating:

“The important question is ne'er are the lawyers charging a lot; it’s is it worthy it? If they tin retrieve a batch of money, past it’s astir apt worthy it.”

The quality comes soon aft FTX bankruptcy justice John T. Dorsey connected Jan. 19 approved Sullivan & Cromwell’s retention arsenic FTX’s ineligible squad contempt contention astir the steadfast allegedly having imaginable conflicts of involvement successful the case.

Good quality for Sullivan & Cromwell. The FTX Bankruptcy Judge conscionable approved their retention amid scathing allegations by a erstwhile FTX Chief Regulatory Officer. No continuance to analyse but the Judge's determination made consciousness and S&C's arguments were compelling/very well-presented. pic.twitter.com/ZSVZdGyvkw

— John Reed Stark (@JohnReedStark) January 20, 2023

The determination came contempt concerns related to Sullivan & Cromwell having advised FTX since earlier it filed for Chapter 11 extortion successful November. On Jan. 9, United States senators John Hickenlooper, Thom Tillis, Elizabeth Warren and Cynthia Lummis called connected the justice to o.k. a question to appoint an autarkic examiner into FTX’s activities. 

Related: SBF says Sullivan & Cromwell contradicted itself with insolvency claims

Sullivan & Cromwell subsequently emphasized that the instrumentality steadfast has "never served arsenic superior extracurricular counsel to immoderate FTX entity" and had a "limited and mostly transactional narration with FTX and definite affiliates anterior to the bankruptcy".

The steadfast did not instantly respond to travel up questions from Cointelegraph.