FTX Burning $53K Per Hour on Lawyers But Still Owes Billions

Embattled crypto exchange FTX submitted an amended bankruptcy reorganization plan this weekend aiming to reimburse billions to creditors and eventually emerge from Chapter 11. However, the path remains unclear amid spiraling legal fees and unfinished business with tax authorities.

Keypoints

• FTX has filed a revised bankruptcy reorganization plan to repay creditors and hopefully end bankruptcy proceedings
• The plan values crypto assets held by customers at the November 2022 bankruptcy filing prices
• FTX’s legal fees related to the bankruptcy have reached astronomical levels, burning through $53,000 per hour
• Total bankruptcy fees have topped $118 million over 3 months so far
• The IRS is seeking over $24 billion in unpaid taxes from FTX, further complicating bankruptcy proceedings

The revised proposal comes a month after FTX’s high-profile November 2022 collapse, which sent shockwaves through the digital asset industry. Under the plan, payouts to customers would be valued at crypto prices the day FTX filed bankruptcy. This approach sparked debate, with critics arguing it fails to adequately protect user assets.

While seeking to repay debts, FTX is burning through money at astonishing rates on legal fees and advisors. Filings show expenditures have reached $53,000 per hour, totaling over $118 million in just three months. With the daily bill stretching past $1.5 million, transparency and efficiency concerns abound regarding the proceedings.

FTX owes an estimated $24 billion in unpaid taxes per IRS claims lodged against the exchange. Combined with legal costs and client shortfalls, total expenses facing FTX may eclipse $1.4 billion.

Some crypto enthusiasts expressed skepticism regarding the trajectory, emphasizing the alarming scale of FTX’s obligations. The spiraling legal fees alone now approach FTX’s estimated customer losses.

Amid the financial disorder, FTX’s native FTT token has shown unexpected stability around $3.60. However, it remains down 95% from its peak, as the exchange navigates uncertain terrain.

For FTX founder Sam Bankman-Fried, currently awaiting trial on fraud charges, the path forward also looks murky at best. With legal predicaments and astonishing bankruptcy bills piling up, FTX still has a long road ahead to emerge from the rubble.