Ex-SEC Executive Criticizes Legal Team’s Lucrative Gains in FTX Bankruptcy

• Chapter 11 FTX’s restructuring plan was certain to fail, according to Stark.
• Last quarter, FTX spent around $53,000/hour on legal and consulting expenses.

John Reed Stark, a former member of the U.S SEC, has hinted that the legal team may be trying to benefit from the bankruptcy proceedings via the FTX restructuring plan.

Given the large gains made by the legal team during bankruptcy proceedings, Stark said in a post on twitter that all FTX clients should get a sardonic “Thank You” message from the legal team. In addition, Stark made the sardonic comment that in 2024, every member of the legal team would be able to purchase a new beach home.

Sullivan & Cromwell attorney Andy Dietderich, who represents FTX, reiterated during a hearing on January 31 in the United States Bankruptcy Court for the District of Delaware that, despite considerable efforts, a relaunch of FTX (FTX 2.0) under the Chapter 11 bankruptcy framework is not on the cards. Chapter 11 FTX’s restructuring plan was certain to fail, according to Stark.

From 2022 until 2023, the insolvent cryptocurrency exchange FTX’s restructuring team and attorneys charged over $200 million. The court-appointed fee examiner, Katherine Stadler, determined that the fees were acceptable, finding that they were “not wholly unreasonable at the moment” in a report submitted on June 20, 2023.

Last quarter, FTX spent around $53,000/hour on legal and consulting expenses, according to compensation reports. This was for the quarter ending October 31, 2023. During the 92 days from August 1, 2023, to October 31, 2023, the bankruptcy legal team billed a minimum of $118.1 million, according to documents dated December 5, 2023–December 16, 2023. This works out to an average of $1.3 million per day, or $53,300 per hour.

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