Legal Fees

Winklevoss slams DCG’s Silbert — Not even SBF was ‘capable of such delusion’

July 4, 2023 Coin Telegraph

In an open letter, Cameron Winklevoss slammed DCG's Barry Silbert for allegedly playing the victim card while owing $1.2 billion to Gemini’s 232,000 Earn customers.

Crypto exchange Gemini founder and CEO Cameron Winklevoss is again threatening to sue Digital Currency Group and its CEO Barry Silbert over delays in the resolution of Genesis for its Earn customers while slamming the CEOfor allegedly trying to play the victim card.

In the July 3 “Open Letter to Barry Silbert,” Winklevoss alleged the DCG enterprise had engaged in “fraudulent behavior” via a “culture of lies and deceit” — which have come at the expense of Gemini’s 232,000 Earn users.

Earn Update: An Open Letter to @BarrySilbert pic.twitter.com/ErsYpcEjQD
— Cameron Winklevoss (@cameron) July 4, 2023

Among the accusations, Winklevoss’ strongly-worded letter alleges that Silbert intentionally delayed resolution through “abuse” of the mediation process, stating:

"Mediation has given DCG an indefinite forbearance on the $630 million it owes Genesis — for free."

Most disturbing, according to Winklevoss, has been Silbert’s apparent claim of being the “victim” in the debacle.

“It takes a special kind of person to owe $3.3 billion dollars to hundreds of thousands of people and believe, or at least pretend to believe that they are some kind of victim," said Winklevoss, adding:

Not even Sam Bankman-Fried was capable of such delusion.”

DCG’s Genesis was the lender behind Gemini Exchange's Earn program, a product that promised returns as high as 8% to depositors. However, on November 16, Genesis announced it temporarily suspended withdrawals citing “unprecedented market turmoil.” Genesis later filed for bankruptcy on January 19.

Genesis later filed for bankruptcy on January 19, with Gemini seeking to recover its share of the billions owed by Genesis to creditors since.

However, after what Winklevoss has described as multiple delays, he appears to have had enough.

“I write to inform you that your games are over,” Winklevoss said, explaining that professional fees have now “ballooned” to over $100 million at the expense of credits and Earn users. “Enough is enough.”

Winklevoss has now given Silbert an ultimatum, accept his firm’s “best and final offer” by 4 pm ET on July 6 — or face a lawsuit on July 7.

*The final offer to DCG as presented by Cameron Winklevoss. Source: Twitter*

The offer pitched calls on DCG to make a $275 million payment by July 21, an additional $355 million before July 21, 2025 and a final payment of $835 million by July 21, 2028 — five years from the "Plan Support Agreement” date proposed by Winklevoss.

The total payment will come to $1.47 billion.

Winklevoss wants the payments to be made in the form of Bitcoin (BTC) Ether (ETH) and the United States dollar (USD), with the funds sourced from Genesis Global Trading, potential payouts from FTX and Alameda Research’s bankruptcy estates in addition to Avalanche (AVAX) and Near (NEAR) tokens it may have a claim to from Three Arrows Capital’s bankruptcy estate.

Cointelegraph reached out to DCG for comment but did not receive an immediate response.

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FTX’s bankruptcy lawyers and advisors pocket $32.5M in February

April 11, 2023 Coin Telegraph

<div>FTX's bankruptcy lawyers and advisors pocket .5M in February</div>

Coin Telegraph

The reimbursement expenses for FTX’s massive team of legal professionals are just as exorbitant in February as they were the previous month.

February’s round of legal expenses for bankrupt crypto exchange FTX has been published and it remains a scary figure for debtors.

A series of court filings from April 4 to April 10 detailed the monthly fee statements for February of the law firms involved with FTX’s bankruptcy proceedings which come to a combined total of around $32.5 million.

The figure didn’t include the recompense for restructuring chief and CEO John J. Ray III who pocketed $305,000 in February according to a March court filing.

Ray’s remuneration for March came in at a similar figure, with an April 10 filing showing his total fees and expenses were $329,173.

The FTX chief billed at $1,300 per hour and reported working 255.9 hours for the period of Mar. 1 to Mar. 31. This makes his fees a whopping $327,470, with the remaining $1,703 for airfares, lodging, transport, meals, and other expenses.

*John J Ray III's expenses and hourly billings for the month of March. Source: Kroll*

The law firm Quinn Emanuel Urquhart and Sullivan sought a total of over $2.7 million in reimbursements for February. Partners at the firm billed between $1,246 and $1,917 per hour and associates billed between $747 and $1,183 per hour. The total number of hours billed for the firm was nearly 2,610.

*A 167-page fee statement from Quinn* *Emanuel Urquhart & Sullivan outlined that its largest billing was for "investigation." Source: Kroll*

April 4 filings for the law firm Alvarez and Marsal and forensic investigation consultant Alix Partners detailed their February fee statements totaled over $11.9 million and around $3.6 million respectively.

The largest amount sought was from law firm Sullivan and Cromwell which billed a total of over $13.4 million for work carried out for FTX in February by their burgeoning team of lawyers and associates.

*Sullivan and Cromwell's employees collectively spent over 12,000 hours working on FTX in February. Source: Kroll*

Meanwhile, on the lower end of the scale, investment banking firm Perella Weinberg Partners billed $77,891 while bankruptcy co-council Landis Rath and Cobb invoiced $582,604 for February.

Advisors and lawyers for the bankrupt exchange billed a similar amount in January, with FTX shelling out $34.18 million for their combined services in January according to earlier court documents.

The fees, reimbursements, and expenses that FTX has forked out to its phalanx of lawyers, associates, paralegals, accountants, investigators, directors, and executives remain tough to swallow for customers still waiting for recompense.

The bankruptcy is far from over and it's reported that Sullivan and Cromwell alone will reap hundreds of millions of dollars before the firm’s bankruptcy investigation wraps up.

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FTX lawyers, creditors slam SBF’s petition to get legal fees reimbursed

March 30, 2023 Coin Telegraph

claim

The creditor's committee and FTX lawyers have raised several arguments in objecting to Bankman Fried’s request. A hearing date is set for April 12.

Sam Bankman Fried’s new petition to have his legal expenses reimbursed has been met with fierce objection from lawyers representing the crypto exchange and its creditors committee.

As per previous reporting by Cointelegraph, Bankman-Fried’s lawyers had filed a motion on March 15 seeking to have his court costs covered by directors and officers (D&O) insurance policies, which if approved by the judge would see him placed at the top of the payout queue.

Defense costs are covered in most policies (after a deductible) but insurers have provisions for selection of counsel so even if approved the insurer is unlikely to approve the high priced lawyers SBF has (or needs).
— Mr. Purple (@MrPurple_DJ) March 16, 2023

In March 29 objection filing, FTX’s lawyers objected to Bankman-Fried’s attempt to prioritize his own legal fees at the expense of other potential claimants, stating:

“It would be unfair, inequitable, and contrary to the interests of justice to allow Mr. Bankman-Fried to drain the D&O Policies for his sole benefit”

FTX’s lawyers argue that if the court rules in favor of Bankman-Fried then the insurance payout should apply to other directors and officers who have a claim to the funds.

The Official Committee of Unsecured Creditors also filed an objection on the same day, noting that D&O insurance policies only apply “where they make honest decisions in the ordinary course of the business,” which it argues “is not the case” regarding Bankman-Fried’s request.

The committee argued that the court should thus decline the request, labeling Bankman-Fried the “alleged perpetrator of one of the largest criminal frauds in the last decade.”

This sentiment has been echoed by some from the crypto community prior to Sam Bankman Fried’s request.

Directors and officers (D&O) liability insurance is a type of insurance coverage that protects individuals from personal losses if they are sued as a result of serving as a director or an officer for a firm. Such policies can also be used by the firm to cover legal fees and costs incurred as a result of a lawsuit against a former officer or director.

The creditors committee however argued that Bankman-Fried had failed to justify his claim to the $10 million in available coverage which should instead go towards covering FTX’s losses.

According to reports, the former FTX CEO is currently paying his legal fees with $10 million he had previously gifted to his father Joseph Bankman, after Bankman-Fried loaned the funds from Alameda Research.

Bankman-Fried was charged with 12 criminal counts on Feb. 22, which included numerous fraud charges, and was rounded up to a baker’s dozen on Feb. 28 following allegations that he used $40 million in an attempt to bribe a Chinese official.

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Lawyers’ picnic: FTX counsel and advisers rake in $34M in January

March 8, 2023 Coin Telegraph

Lawyers’ picnic: FTX counsel and advisers rake in M in January

accounting

Millions have been invoiced from a host of law firms, investment bankers, consultants and financial advisers in FTX’s bankruptcy case.

The law firms, investment banks and consulting companies working with FTX on its bankruptcy case billed the crypto exchange a combined $34.18 million in January, court documents reveal.

FTX’s chief restructuring officer and new CEO, John J. Ray III, also received a hefty pay package, charging $1,300 an hour to a total of $305,000 in February according to a March 6 filing.

*Fee breakdown of FTX CEO John J. Ray III over the month of February. Source:* *Kroll*

Separate court filings on March 6 show United States law firms Sullivan & Cromwell, Quinn Emmanuel Urquhart & Sullivan and Landis Rath & Cobb invoiced $16.9 million, $1.44 million and $684,000, respectively, for their services and expenses in January.

Lawyers and staff of Sullivan & Cromwell billed a total of 14,569 hours for their work, which equates to over 600 days. Some partners received up to $2,165 per hour, while the firm’s paralegals and legal analysts were being billed out at $425 to $595 per hour.

The highest-priced billables were discovery ($3.5 million), asset disposition ($2.2 million) and general investigation work ($2 million).

*Sullivan & Cromwell’s fee statement as counsel to FTX Trading for the month of January. Source:* *Kroll*

It submitted another hefty $7.5 million bill to FTX for the first 19 days of February.

Ray played a crucial role in keeping Sullivan & Cromwell on board as legal counsel, having filed a court motion on Jan. 17 arguing that the white-shoe law firm had been integral in taking control over the “dumpster fire” that was handed to him.

His filing came in response to an objection to the retention of the law firm on Jan. 14 by U.S. Trustee Andrew Vara, who claimed that Sullivan & Cromwell had failed to sufficiently disclose its connections and prior work for FTX.

FTX special counsel Landis Rath & Cobb spent much of its working hours attending court hearings and litigation procedures. For its efforts, the firm billed the FTX administrators $684,000, including expenses.

Between the three law firms, over 180 lawyers and over 50 non-lawyer staff worked on the case, most of who came from Sullivan & Cromwell.

Forensics consulting firm AlixPartners billed $2.1 million for January. Almost half of the firm’s hours were spent on forensic analysis of decentralized finance products and tokens in FTX’s possession.

Consulting firm Alvarez & Marsal invoiced for $12.5 million for over 17,100 hours it committed to avoidance actions, financial analysis and accounting procedures.

*A breakdown of Alvarez & Marsal’s monthly fee statement by project, hours and fees for the month of January: Source:* *Kroll*

Investment bank Perella Weinberg Partners billed a monthly service fee of $450,000 plus more than $50,000 in expenses for planning a restructuring strategy and engaging in correspondence with third parties.

With FTX’s trial set for October, there are at least another six months of legal work to do for the law firms involved. Recent reports have estimated that the fees could reach in the hundreds of millions by the time the case is over, which could potentially rival the $440 million in fees that New York-based law firm Weil Gotshal made from the infamous Lehman Brothers bankruptcy in 2008.

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