A Scrutiny of FTX's Restructuring Approach by Former SEC Insider - Latest cryptocurrency news

A Scrutiny of FTX’s Restructuring Approach by Former SEC Insider

A former U.S. Securities and Exchange Commission (SEC) authority, John Reed Stark, has voiced skepticism regarding the restructuring strategy of the now-defunct cryptocurrency exchange, FTX. On social media, Stark derided the windfall legal teams are potentially reaping from the bankruptcy situation, suggesting a hypothetical note of ‘thanks’ from FTX to its legal representatives for their profitable outcome.

Ex-SEC Veteran Casts Doubt on Legal Profitability

Stark mockingly implied that the attorneys involved in the FTX case could afford luxury homes with their earnings by 2024. Contradicting FTX’s lawyer Andy Dietderich’s assertion of strenuous efforts with no revitalization plans, Stark assessed the likelihood of FTX successfully restructuring under Chapter 11 as slim, equating it to restructuring notorious criminal organizations.

Technology & Populer Science News: Newslinker.co

FTX’s Legal Expenditures Raise Eyebrows

Documentation reveals that FTX’s legal and restructuring teams have accumulated over $200 million in fees from November 2022 to June 2023, an amount the court’s fee examiner deemed reasonable. Despite this, recent filings show a staggering $53,000 per hour rate spent on legal and consulting services for the quarter ending in October 2023, indicating an intense burn rate of $1.3 million a day over a 92-day stretch.

Amid attempts to mitigate losses, FTX has petitioned a Delaware court for permission to liquidate a $175 million claim against Genesis Global Capital, held by its affiliate, Alameda Research. This move could enable FTX to sell the claim in full or in part at an opportune time.

The collapse of FTX in November 2022, precipitated by financial discrepancies, led to the exposure of a $175 million position held with Genesis. The latter claimed its operations remained unaffected despite the bankruptcy proceedings.

Disclaimer: The information contained in this article does not constitute investment advice. Investors should be aware that cryptocurrencies carry high volatility and therefore risk, and should conduct their own research.
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