In recent times, bankruptcies within the cryptocurrency sector have driven a sharp rise in legal expenses, proving lucrative for major law firms. Firms like Sullivan & Cromwell and Kirkland & Ellis have collectively earned more than $700 million from handling these high-profile cases. This surge in costs has become a significant concern as financial irregularities and mismanagement in the crypto industry have come to light.

At the heart of this trend are collapses of prominent crypto entities such as FTX Trading Ltd, Genesis Global Capital, BlockFi, Celsius, and Voyager Digital. These bankruptcies underscore the inherent volatility and risks within the crypto market, revealing the substantial legal and administrative costs involved in resolving complex financial structures. Sullivan & Cromwell, notably involved in managing the FTX bankruptcy, has been pivotal in navigating the legal complexities of these cases.

The FTX bankruptcy proceedings, initiated in November 2022 after revealing an $8 billion shortfall, became a major revenue stream for Sullivan & Cromwell. The firm, along with other consultants, amassed a total bill exceeding $500 million, with overall fee claims surpassing $700 million. Although some fee claims were reduced by up to 20%, the financial burden remains substantial. Sullivan & Cromwell secured approval for $254 million out of a $360 million bill, while financial advisors Alvarez and Marsel earned $133 million in legal fees.

Other firms like AlixPartners, Quinn Emanuel Urquhart & Sullivan, Perella Weinberg Partners, and Landis Rath and Cobb were also involved in the FTX case, collectively claiming $57 million in fees. Additionally, FTX CEO John Ray III and RLKS Executive Solutions billed significant amounts, with Ray charging $1,300 per hour totaling $5.6 million, and RLKS billing $26 million. The Official Committee of Unsecured Creditors incurred $81 million in fees and $1.5 million in expenses, while the Ad Hoc Committee's fees remained under $5 million.

In separate crypto bankruptcy cases, Kirkland & Ellis earned over $120 million for their roles in the Celsius, Voyager Digital, and BlockFi bankruptcies. These filings, all under Chapter 11 during the 2022 crypto market downturn, brought substantial fees to the firm. The Celsius bankruptcy, arising from the collapse of TerraUSD and Luna, accounted for $76 million in fees alone, while Voyager and BlockFi contributed $27 million and $16 million in fees, respectively.

In conclusion, the financial fallout from these high-profile crypto bankruptcies has underscored the exorbitant costs associated with legal proceedings, highlighting the challenges and complexities of regulating the crypto industry amidst its rapid growth and inherent risks.