FTX’s bankruptcy fees exceed $200M, says court examiner.

The wind-up of cryptocurrency exchange FTX is expected to be very costly, according to a court-appointed examiner who filed a report on Tuesday. Katherine Stadler, a bankruptcy attorney appointed to review fees, revealed that professional fees had already exceeded $200 million. As of January, lawyers and other professionals had spent nearly 35,000 billable hours on the case. Stadler pointed out that these costs represent 2% of estate assets and 10% of reported cash, with 46 of the 242 attorneys assigned to the case charging over $2,000 per hour.

Stadler highlighted the lack of regulation in the largely unregulated financial system in which FTX operates, adding that there was “nonexistence of even the most basic corporate governance” at Sam Bankman-Fried’s exchange. Stadler did praise the professionals working on the case, stating that “very few firms could have accomplished what these professionals accomplished in 90 days…transforming a smoldering heap of wreckage into a functioning Chapter 11 debtor-in-possession”. However, Stadler did call for some of the fees to be reduced, asking lead counsel Sullivan & Cromwell to cut their $42 million bill by some $650,000, citing deficiencies such as overstaffing, excessive meetings and vague paperwork.

FTX, which collapsed in November, has been under the control of new CEO John J Ray III since then. Ray has been trying to settle the exchange’s affairs, with some of his filings hinting at an attempt to reboot operations as FTX 2.0. A bid by the U.S. government to conduct an independent examination of FTX’s downfall has been referred to the Court of Appeals.

Edited by Parikshit Mishra.

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