The aborted restructuring of bankrupt cryptocurrency exchange FTX has raised serious concerns about the profits made by the legal team handling the bankruptcy.
Former SEC official John Reed Stark described FTX's restructuring plan as a robbery.
He also announced that the FTX bankruptcy team's lawyers should send thank you notes to all FTX customers. According to Stark, the FTX legal bankruptcy team likely made a significant amount of revenue from the process.
Stark predicted more than a year ago that FTX's Chapter 11 restructuring would never happen. Despite this, the FTX bankruptcy team, which Stark claimed was seeking tens, perhaps even hundreds of millions of dollars, persisted in supporting the idea that FTX could turn around and become a regulated, successful financial company.
A year later, FTX will apparently undergo Chapter 7 liquidation, according to a Reuters report. Stark questioned the amount of legal and consulting fees received from FTX before reaching this conclusion.
Reports show that FTX bankruptcy law and other professionals earn an average wage of $1800 per hour ($2375 per hour for top law firm partners), earn up to $1.5 million in fees per day, and have generated close to $250 million in total revenue to date (November 2023 It is reported to be $225 million by .
A law firm handling an FTX bankruptcy would generate so much revenue that it would be among the top 200 law firms in the United States even if the firm had taken no other business last year.
Stark, who is not a bankruptcy lawyer but has taught at Georgetown and Duke law schools for 20 years and has worked in cyber, business, law and technology for more than 35 years, calls these fees excessive and the Chapter 11 plan completely delusional.
*This is not investment advice.
