Despite having $175 million in FTX accounts, Genesis Global Capital insisted that these funds had no impact on its market-making operations.
According to John Reed Stark, a former US Securities and Exchange Commission (SEC) officer, the FTX reorganization plan might be a chance for the exchange’s legal staff to benefit from the bankruptcy process.
Stark voiced his doubts on social media, where he also offered the amusing suggestion that the now-defunct legal firm representing the FTX exchange should send a sardonic “Thank You” card to all of the exchange’s clients in recognition of the huge sums of money they supposedly gained during the bankruptcy.
Moreover, he made a joke about how the whole legal team would be able to buy a beach home in 2024. Sullivan & Cromwell attorney Andy Dietderich, who represents FTX, said during a hearing on January 31 in the United States Bankruptcy Court for the District of Delaware that, despite considerable attempts, FTX 2.0—a relaunch under the Chapter 11 bankruptcy framework—is not in the cards.
Stark has previously voiced his skepticism about the efficacy of the Chapter 11 FTX restructuring plan, drawing a comparison between the difficulty of reorganizing FTX and the task of reorganizing a handful of infamous companies, including “Murder Incorporated, The Cali Drug Cartel, and Madoff Investment Advisory Services.”
There has been a lot of focus on the legal bills and other costs associated with the bankruptcy. From November 2022 to June 2023, the restructuring team and lawyers overseeing FTX billed more than $200 million.
The court-appointed fee examiner, Katherine Stadler, expressed her opinion that these costs were appropriate, describing them as “not wholly unreasonable at the moment” in a report submitted on June 20, 2023.
Recent pay reports show that FTX spent almost $53,000 per hour on legal and consulting expenses for the quarter ending October 31, 2023, which resulted in enormous spending.
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