The FTX reorganisation proposal was dubbed a “highway robbery of highway robbers” by former Securities Exchange Commission (SEC) official John Reed Stark.
According to former Securities Exchange Commission (SEC) official John Reed Stark, the FTX reorganisation plan could be a means for the legal team to make money off of the bankruptcy proceedings.
Stark stated in a post on the social media site X that, considering the huge profits the bankrupt exchange gained throughout the bankruptcy process, all FTX clients ought to receive a snarky “Thank You” message from the bankrupt exchange’s legal team. Stark added, “It’s possible that every member of the legal team can buy a new beach house in 2024.”
FTX attorney Andy Dietderich of Sullivan and Cromwell made it clear during a Jan. 31 hearing in the U.S. Bankruptcy Court for the District of Delaware that, despite great efforts, there were no intentions to relaunch FTX, also known as FTX 2.0, inside the existing Chapter 11 bankruptcy framework.
Stark claimed to have predicted the impossibility of the Chapter 11 FTX reorganisation plan. He compared the process of reorganising FTX to attempting to combine Madoff Investment Advisory Services, The Cali Drug Cartel, and Murder Incorporated. As a result, he probably didn’t think it was necessary to invest in the legal counsel.
Over $200 million was billed by attorneys and the restructuring team overseeing the bankrupt cryptocurrency exchange FTX between November 2022 and June 2023. The costs were judged appropriate by Katherine Stadler, the court-appointed fee examiner, who concluded in a report released on June 20 that the payments were “not wholly unreasonable at the moment.”
However, according to latest compensation reports, bankrupt cryptocurrency exchange FTX spent around $53,000 per hour on legal and advisory expenses in the quarter that ended on October 31. The bankruptcy legal team charged at least $118.1 million between August 1 and October 31, averaging $1.3 million per day or $53,300 per hour over the course of 92 days, according to documents dated December 5 to December 16.
FTX filed a plea to sell its $175 million claim against the bankrupt Genesis Global Capital in a Delaware court on February 1. The claim is owned by the related hedge fund, Alameda Research. If granted, FTX may sell the claim in full or in portions, arranging the sales to take advantage of the best terms.
Following the discovery of anomalies in its account books, FTX folded in November 2022. Genesis claimed that its market-making operations were unaffected by the $175 million that was locked up in its FTX account at the time.