The 2022 crypto winter caused several major companies in the industry to declare bankruptcy, significantly benefiting the lawyers and advisors managing these high-profile cases.

Financial troubles faced by prominent companies like FTX Trading Ltd, Genesis Global Capital, BlockFi, Celsius, and Voyager Digital created substantial opportunities for the legal firms involved. So far, firms such as Sullivan & Cromwell and Kirkland & Ellis have collectively earned $820 million in fees.

Lawyers Handling FTX Bankruptcy See Big Gains

Sullivan & Cromwell, acting as special counsel for the FTX estate, has profited the most from these cases.

FTX, founded by Sam Bankman-Fried (SBF), was once the second-largest crypto trading platform globally after Binance. However, the Bahamas-based exchange encountered a liquidity crisis following an $8 billion shortfall in its accounts, leading to its bankruptcy declaration in November 2022 and a Chapter 11 filing in the United States.

Legal and advisory fees for the team working with FTX have surged from $500 million to over $700 million. Sullivan & Cromwell alone billed $254 million in fees, though their initial demand of $360 million was rejected. Other involved firms, such as financial advisers Alvarez and Marsel, also earned substantial amounts, with some bills still pending court approval.

Kirkland & Ellis: Counsel for Major Crypto Firms

Kirkland & Ellis has also benefited from the collapse of these companies, serving as lead counsel for firms like Celsius, Voyager Digital, and BlockFi that sought Chapter 11 bankruptcy protection.

Celsius, for example, suspended deposits and withdrawals in June due to unfavorable market conditions and later filed for bankruptcy. Kirkland & Ellis assisted with the reorganization, earning $76 million for the Celsius case alone and filing a final fee application of over $120 million for all cases combined. Celsius exited bankruptcy in February and repaid $3 billion to investors.

Rising Demand for Bankruptcy Lawyers in the Crypto Industry

Despite the surge in legal fees from 2022 cryptocurrency bankruptcy cases, the demand for bankruptcy lawyers in the crypto economy has increased significantly. According to the Thomson Reuters Institute, there has been a 4.4% year-over-year rise in the need for bankruptcy legal services within the crypto sector, which now sees the highest demand for such services compared to other financial sectors globally.