Former U.S. Securities and Exchange Commission (SEC) official John Reed Stark has expressed skepticism regarding the FTX restructuring plan, suggesting that it could serve as a means for the legal team to profit from the bankruptcy proceedings. In a social media post, Stark sarcastically remarked that, by 2024, every member of the legal team might be able to afford a new beach house. During a hearing on January 31 in the U.S. Bankruptcy Court for the District of Delaware, FTX attorney Andy Dietderich of Sullivan & Cromwell clarified that, despite extensive efforts, there are no plans to reopen under the Chapter 11 framework known as FTX 2.0. Stark foresees FTX's Chapter 11 restructuring plan facing challenges, comparing it to reorganizing a combination of "Murder Inc., the Cali Cartel, and Madoff Investment Advisory Services."
From November 2022 to June 2023, the legal and restructuring team overseeing the bankrupt cryptocurrency exchange FTX accumulated over $200 million in fees. Court-appointed fee examiner Katherine Stadler deemed the fees reasonable, stating they were "not entirely unreasonable at this time" in a report filed on June 20, 2023. However, FTX spent around $53,000 per hour on legal and consulting fees in the quarter ending October 31, 2023, according to the most recent compensation filing. Between August 1 and October 31, 2023, the bankruptcy legal team reportedly collected at least $118.1 million in fees, averaging $1.3 million per day or hourly during the 92-day period.
FTX filed a request on February 1 in a Delaware court to sell its $175 million claim against bankrupt Genesis Global Capital. The claim is owned by the related hedge fund Alameda Research. If approved, FTX can sell the claim either in whole or in part, timing the sale based on optimal terms. FTX collapsed in November 2022 after a breach was discovered in its account. At the time, Genesis had $175 million in its FTX account, with the company stating that it would not impact its market-making activities.
