FTX, a cryptocurrency exchange currently undergoing bankruptcy proceedings, is confronted with significant financial burdens arising from legal and advisory expenses.
Recent filings reveal that between February 1 and April 30, the exchange incurred fees and expenses totaling $121.8 million. The Block Research has compiled data shedding light on the breakdown of these costs and the implications for FTX’s bankruptcy proceedings.
Lawyers from Sullivan & Cromwell are representing FTX. They billed the exchange $37.6 million during the specified period, making up 30.9% of the total fees and expenses. Undoubtedly, the significant sum underscores the extensive legal work required for the bankruptcy proceedings.
Furthermore, Alvarez and Marsal, the appointed restructuring consultants, charged $37 million for their services. Surely, their role in navigating the complexities of FTX’s bankruptcy process is crucial. However, Jefferies, the investment banking firm, billed the lowest amount at 0.6% of the total fees and expenses. These expenses include items such as meals, lodging, and miscellaneous costs.
“Super Senior” Claims and Customer Concerns
Notably, the claims and compensation of the restructuring advisors hold a “super senior” position, giving them priority over other claims, including customer deposits. This revelation has sparked concerns among former clients, who now advocate for a reboot of FTX under new leadership to ensure the return of value to customers.
Travis Kling, the chief investment officer at Ikigai Asset Management, remains optimistic about the potential reboot of FTX. He considers it “one of the most bullish outcomes possible for creditors.” Ikigai Asset Management had a majority of its assets held on FTX.
Moreover, leading the movement for the relaunch is Loomdart, an anonymous crypto personality spearheading the FTX 2.0 coalition. Loomdart believes that the regulatory challenges faced by Coinbase and Binance make a relaunch of FTX more feasible.
FTI Consulting’s Role
FTI Consulting played a significant role in the potential restart of the exchange, spending approximately 686.8 hours and billing fees of $761,997.70, as stated in the filings. Their involvement highlights the importance of expert consulting in navigating the complex landscape of FTX’s bankruptcy proceedings.
As FTX grapples with the mounting costs of its bankruptcy, stakeholders are actively exploring avenues to revitalize the exchange and ensure a positive outcome for creditors. The situation remains fluid, and the successful restructuring efforts of FTX will have far-reaching implications for the crypto industry and its participants.