Turmoil in the cryptocurrency industry has rattled major exchanges and sent the value of digital assets tumbling, but at least one group stands to gain: bankruptcy lawyers
involving crypto exchange FTX, hedge fund Three Arrows Capital and crypto lenders BlockFi, Celsius Network and Voyager Digital Ltd are generating new opportunities - and big fees - for law firms that counsel troubled companies.
The value of bitcoin has dropped 65% so far this year, dragging down other crypto assets and leaving investors reeling. The spectacular implosion of FTX last month sent fresh shock waves through the cryptocurrency industry.filed on Monday and is also lead counsel for Celsius Network and Voyager Digital, which both filed for bankruptcy earlier this year.
The lawyers are paid from the assets of a bankruptcy estate, and experts said judges rarely demand significant reductions in professional fees. Kirkland partner Joshua Sussberg is lead counsel in all three of the firm's crypto-related bankruptcies. He has been involved in many major corporate bankruptcies in recent years, including for movie theater chain Cineworld Group and J.C. Penney Co Inc.Wall Street firm Sullivan & Cromwell is bankruptcy counsel for FTX. The firm has not yet revealed its fees, but in a 2021 case involving Kumtor Gold Company, the firm's partners billed up to $1,825 per hour.
The cryptocurrency cases are particularly significant for law firm bankruptcy practices as Chapter 11 filings set off by the COVID-19 pandemic and the struggles of big-box retailers have begun to slow, legal experts said. Crises within certain industries, such as cryptocurrency, can keep business flowing and provide years of steady revenue.
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