FTX spent over $121M on legal and advisory fees from February 1 to April 30.
The bankrupt cryptocurrency exchange FTX and its sister investment firm Alameda Research have not come close to repaying their creditors. According to John J. Ray III, the acting CEO, FTX and Alameda Research have over $8 billion missing from their balance sheets. Dividing the remaining assets among hundreds of institutional investors and thousands of retail traders will not be an easy task for the court. Additionally, FTX used investors’ funds in risky bets, including political buyouts.
FTX Costly Affairs
On June 15, the current FTX officials submitted court filings that revealed the cryptocurrency exchange paid over $121 million in legal, consulting, and financial services fees between February 1 and April 30. Interestingly, Sullivan & Cromwell, the law firm representing FTX, received more than 30% of all the FTX fees during the period, totaling $37.6 million. Jefferies, the investment banking firm, billed approximately 0.6% of the total FTX fees and expenses, which represented the lowest amount. Restructuring consultant firm Alvarez and Marsel charged approximately $37 million, including $51,225 in meals, $149,155 in lodging, and other miscellaneous expenses amounting to $1,995.
SBF Fights Back
The collapse of FTX and Alameda Research exposed a significant gap in crypto regulation in the United States. The FTX implosion is deemed the largest corporate failure in modern history by United States regulators, and the likelihood of Sam Bankman-Fried (SBF) going to jail remains high. Consequently, SBF’s lawyers are pushing for the judge to drop the fraud charges against him. SBF is expected to return for a court hearing later this year, where all the investigations will be presented for the judge to rule on the matter.
More than six months since the FTX and Alameda Research implosion, there have been reports of reopening. The FTX exchange has a large cash balance to repay and make investors whole again. Currently, most digital assets are trading slightly above the FTX capitulation amid fears of increased bearish sentiment. According to data provided by Binance-backed Coinmarketcap, the total crypto valuation is around $1 trillion, with Bitcoin trading at about $26.9k during the early Asian market on Tuesday. However, the crypto market is facing a bearish sentiment following a heightened regulatory crackdown in the United States. Binance and Coinbase Global Inc (NASDAQ: COIN) are already under the SEC’s radar for allegedly selling unregistered securities, including Ethereum staking products, Cardano (ADA), Polkadot (DOT), and Solana (SOL), among many others.
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