Making Bank
“Making Bank” – a cartoon that illustrates the somewhat bizarre situation the FTX fraud case has landed.
Sam Bankman-Fried was found guilty of misappropriating billions of dollars of customer funds deposited with FTX, defrauding investors in FTX of more than $1.7 billion, and defrauding lenders to Alameda of more than $1.3 billion.
Since then, thanks to FTX’s holdings in some successful startups (e.g. Anthropic), almost all customers of the exchange FTX will get their money back — and potentially more.
FTX estimates that it owes creditors around $11.2 billion and that it has between $14.5 billion and $16.3 billion to distribute to creditors.
At the time when FTX’s new CEO, John J. Ray III, took over, he remarked, “never in my career have I seen such a complete failure of corporate controls.”
Today, it seems another form of control is getting out of hand by the people meant to be the adults in the room, since the bankruptcy is proving far more expensive than comparable proceedings, both in absolute terms and as a percentage of the underlying assets and liabilities.
For all the lawyers, forensic accountants and other experts overseeing the bankruptcy process have asked for more than $700M in fees and expenses.
The FTX estate’s special counsel, Sullivan and Cromwell, tops the list, with $254M of approved fees.
Separately from the debtor professionals, the Official Committee of Unsecured Creditors has also racked up its own tab. Its counsel and financial advisors have requested $81M in fees with an additional $1.5M in expenses.
