Bankruptcy Law Firms Boom as Crypto Firms Go Bust

2 December 2022, 19:00 GMT+0000
Updated by Geraint Price
2 December 2022, 19:00 GMT+0000
In Brief
  • Bankruptcy law firms are booming as cryptocurrency companies have successively collapsed over the course of this year.
  • Charging thousands of dollars an hour for their services, some firms can earn over $100 million in fees.
  • Meanwhile, InfoWars Alex Jones recently filed for bankruptcy after being ordered to pay over $1 billion in damages in a recent lawsuit.
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As crypto firms continue to collapse in the wake of FTX, one group in particular has been benefitting: bankruptcy lawyers.

In addition to triggering bankruptcies, such as BlockFi, the collapse of FTX was preceded by several other high profile cases. Some of the most notable have been hedge fund Three Arrows Capital and crypto lenders Celsius Network and Voyager Digital.

With these lucrative new sources of income, some law firms have been able to earn over $100 million in fees.

Crypto Companies Paying Up

Billings rates among law firms are generally not disclosed to the public, except in bankruptcy cases. Debtor company attorneys are required to detail their fees, which must subsequently receive approval from a judge. Typically, judges will not order a reduction in these fees, which are taken from the assets of a bankruptcy estate.

One prominent representative in several of the cases so far has been U.S. law firm Kirkland & Ellis. In addition to representing BlockFi, the firm also serves as lead counsel for Celsius Network and Voyager Digital.

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According to court filings, the company commands up to nearly $2,000 per hour for its services. In each of the latter cases, Kirkland & Ellis has racked up $3.3 million in monthly legal fees on average.

In the case of FTX, Wall Street firm Sullivan & Cromwell have been serving as bankruptcy counsel. While their fees have yet to be revealed, earlier court filings show the firm billed up to $1,825 per hour.

Sullivan & Cromwell is also representing fellow Sam Bankman-Fried firm Alameda Research, and is a creditor of Celsius and Voyager. So far, the highest billing rates have gone to Latham & Watkins, for their services to Celsius and Three Arrows Capital. Their highest fees have topped out at $2,075 an hour, according to court papers. 

Alex Jones Files for Bankruptcy

These cases have provided a new source of revenue for these firms, just as a recent trend begins to diminish. Over the past few years, many bankruptcy practices benefitted from a series of closures due to the coronavirus pandemic. Yet as those cases subside, and crypto cases rise, another notable bankruptcy has emerged. 

Alex Jones, a far-right commentator known for his InfoWars program, recently filed for Chapter 11 bankruptcy at a Houston court. In Oct., a jury ordered Jones and the parent company of InfoWars to pay over $1 billion in damages to relatives of victims of the 2012 Sandy Hook mass shooting.

For years, Jones claimed that the attack was a hoax, and the victims’ families had been accosted by his supporters.

Although Jones has since admitted the massacre actually took place, he continues to use his platform to spread conspiracy theories.

Jones’ rhetoric is so abrasive, that even Elon Musk has refused to restore his Twitter account following his policy change emphasizing freedom of speech.

Disclaimer

BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.