In bankruptcy cases, crypto companies have incurred legal fees totaling more than $750 million.
It looks like lawyers are making a lot of money off of the crypto chaos. A rash of cryptocurrency-related bankruptcies that commenced in 2022 has resulted in the transfer of over $750 million to the coffers of prominent law firms.
Seven Chapter 11 bankruptcy cases associated with the crypto collapse have been managed by 22 prominent law firms, as indicated by an examination of court documents. Additionally, they have accrued fees totaling $751 million as of the time of this writing.
The increase in legal expenditures is comparable to previous rises, such as the retail shake-ups during the pandemic or the oil and gas bankruptcies in 2015 and 2016. Nevertheless, the legal fees are decreasing as the crypto market stabilizes, and they may cease entirely by the end of the year.
Three of the seven cases are still accumulating substantial expenses for the law firms, while the remaining four have been virtually complete.
Three of the ongoing cases are still making substantial profits: FTX and its proprietor Sam Bankman-Fried, who have been convicted of fraud; Genesis Global, an exchange that collapsed following FTX’s collapse; and Terraform Labs and the May 2022 collapse of its UST stablecoin.
According to reports, Genesis was able to reimburse creditors for approximately $4 billion in digital assets and currency. The most recent data available indicates that these three cases alone generated approximately $15 million in legal fees in June.
During the peak of the crypto turmoil in mid-2023, the combined fees from these cases exceeded $35 million per month. Nevertheless, the genuine goldmine has been FTX. Spread across five law firms, it generated fees exceeding $312 million.
That is more than double the second-highest earner, Celsius Network, which distributed approximately $155 million to four companies. Genesis’s case is the subsequent one, which involves approximately $97 million in legal fees.
Sullivan & Cromwell has invoiced the most in these cases than any other firm, primarily due to their role as debtor’s counsel for FTX. Through June, the New York-based organization has accrued $215 million in fees.
Although they were invoicing over $10 million per month at their apogee, their billings have declined to below $7 million in recent months.
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