The cryptocurrency market collapse in 2022 left behind a “storm” of bankruptcy, and in that storm, the ones who profited were the “bankruptcy lawyers.” They have collected hundreds of millions of dollars from lawsuits by giants like FTX, Celsius, Voyager, or BlockFi.

2022 saw the collapse of many major cryptocurrency exchanges such as FTX, Celsius, Voyager, and BlockFi, plunging the industry into an unprecedented crisis. And in this “storm,” one profession has become better off: “bankruptcy lawyers.”

Two leading law firms, Sullivan & Cromwell and Kirkland & Ellis, have seized the opportunity and turned bankruptcy cases in the cryptocurrency sector above into a “gold mine” for themselves.

Sullivan & Cromwell is managing the bankruptcy of FTX, the cryptocurrency exchange founded by Sam Bankman-Fried. FTX had to file for bankruptcy in November 2022 after a massive customer withdrawal revealed an $8 billion deficit in its account.

According to data from The Block, the lawsuit brought in more than $500 million in compensation for FTX's bankruptcy lawyers and advisors, pushing the total cost of the bankruptcy process to a dizzying figure of $700 million. While some requests have been cut by 20%, currently many more are still awaiting approval.

Notably, court records revealed that Sullivan & Cromwell was approved by the court for $254 million in compensation, lower than their original request of $360 million. Financial advisors Alvarez & Marsel alone were approved for a hefty fee, $133 million.

Several other firms and advisors such as AlixPartners, Quinn Emanuel Urquhart & Sullivan, Perella Weinberg Partners, and Landis Rath & Cobb, racked up a total of $57 million in legal fees.

Additionally, John Ray III, CEO of FTX also charged what was arguably an exorbitant fee, $5.6 million for debris cleanup work at FTX at an average cost of about $1,300/hour. RLKS Executive Solutions, the company that supplies executives to FTX, billed $26 million.

The Official Committee of Unsecured Creditors alone cost $81 million in compensation and $1.5 million in expenses, while the Ad Hoc Committee requested $5 million in funds. remuneration.

Former office of bankrupt cryptocurrency exchange, FTX

Not only FTX, according to information from Bloomberg earlier this year, law firm Kirkland & Ellis earned more than $120 million for its role as a “bankruptcy lawyer” in three lawsuits from Celsius, Voyager, and BlockFi.

Previously in January 2023, Kirkland & Ellis filed for final payment of the three bankruptcy cases, requesting $76 million for the Celsius case, significantly higher than $27 million and $16 million. USD  obtained from Voyager and BlockFi lawsuit.

According to data from the Thomson Reuters Institute last August, demand for bankruptcy services grew 4.4% year-on-year in 2022, the highest increase across all legal services sectors, continuing followed by litigation services with a growth rate of 3.2%.

The story of the “winners” in the storm of the cryptocurrency market shows a harsh reality: “when the market crashes, there are those who profit from the misfortune of others.”