It has now been seven months since FTX exchange filed for bankruptcy after a massive bank run and billions of dollars worth of user and creditor funds are still stuck on the platform. As the bankruptcy unfolds, the exchange seems to be bleeding even more money with none of it going back to creditors. So what is FTX spending millions of dollars on?
$120 Million Spent In Two Months
A report by The Block has revealed that the bankrupt FTX exchange spent a total of $121.8 million in the space of two months. The data which spans between February 1 and April 30 shows that this money went to various facets including “legal, consulting and financial services fees and expenses.”
A large chunk of this amount went to the Alvarez and Marsel restructuring consultants who received a total of $37 million. Even more interesting is the fact that they received more than $1.1 million for expenses alone. These expenses ranged from lodging and food, coming in at $149,155 and $51,225, respectively. As well as $1,995 in what is marked as miscellaneous spending.
Another $37.6 million went to the lawyer at Sullivan & Cromwell, which is the law firm representing the defunct crypto exchange. This amount included all fees and expenses for the law firm. One firm named FTI Consulting received $761,991.70 for 686.8 hours of work under the billing title “Exchange restart” fueling rumors that the FTX exchange could be back up and running in the future.
Going by the data in this report, it seems that FTX is spending an average of $60 million per month, while users and creditors still have their funds stuck on the exchange.
FTT price struggles below $1 | Source: FTTBUSD on TradingView.com
The Infamous FTX Trial
Founder and former CEO of the FTX exchange, Sam Bankman-Fried aka SBF, was arrested late last year in December in the Bahamas and extradited to the United States. After preliminary hearings, the founder’s trial has been scheduled to begin in October for a number of charges including misappropriation of customer and investor funds, among others.
As for Sam Bankman-Fried, the founder has denied any allegations of fraud despite his co-founder Gary Wang, and Caroline Ellison, ex-CEO of Alameda Research, pleading guilty to fraud charges. SBF maintains that there was no fraud going on but rather that they made management mistakes which eventually led to the collapse of the exchange.
Bankman-Fried’s lawyer moved to have 10 of the 13 criminal charges that were levied against the founder dismissed back in May. But a June 14 filing shows that the charges have been reduced to the eight charges that were originally filed against him in 2022, with five charges suspended.
However, this does not affect the timeline as prosecutors revealed they were on track to proceed with the trial as scheduled carrying forward with the eight original charges.