FTX lawyers working on the crypto exchange’s bankruptcy case billed nearly $40 million in expenses in January, according to documents filed in court.

The lawyers are part of a group of legal experts hired to assist FTX in its Chapter 11 bankruptcy case, which was filed last year after the exchange faced a series of legal challenges and financial difficulties. 

The high legal fees have raised concerns among some creditors and stakeholders, who question whether the expenses are reasonable and necessary for the bankruptcy proceedings.

Three firms, totaling over 180 lawyers, have been assigned to the case, along with over 50 non-lawyer staff members such as paralegals.

Sullivan & Cromwell has been retained as counsel by bankruptcy administrators. They have also hired Quinn Emmanuel Urquhart & Sullivan and Landis Rath & Cobb to serve as special counsel in the proceedings.

According to court documents, Sullivan & Cromwell billed $16.8 million for 14,569 hours of work in January. Quinn Emanuel Urquhart & Sullivan invoiced $1.4 million, while Landis Rath & Cobb charged $663,995.

Alvarez & Marsal and Perella Weinberg Partners, both financial services firms, were also retained. Their responsibilities include sifting through FTX accounts to discover whether assets can be sold. Alvarez & Marsal billed $12.3 million in January.

The U.S. Department of Justice initially opposed FTX hiring Sullivan & Cromwell, citing potential conflicts of interest. The firm was eventually approved to continue to represent FTX by a U.S. bankruptcy court judge in Delaware.

John Ray III, who became FTX CEO in November and was previously involved in helping clean up energy company Enron, reportedly submitted a bill for $305,565 for the month of February.

Former FTX CEO Sam Bankman-Fried also objected to the firm being hired by bankruptcy administrators, stating that the law firm’s personnel coerced him into filing for bankruptcy protection in November.

It is unknown when or if other FTX customers will be able to access their funds again. In its presentation, the company indicated that it will continue to keep customers informed of developments.

The defunct crypto firm claims to have found nearly $9 billion shortfall in customer funds that it is unable to account for.

In court documents filed in January, a legal firm representing the bankrupt exchange stated that it had located $5.5 billion in crypto and fiat assets in customer accounts and other business divisions.

According to reports, FTX processes around $11.2 billion in customer deposits. Just roughly $2.6 billion, though, can be accounted for.

In the most recent update, FTX Debtors is seeking to release $9 billion or more in value for Grayscale’s Bitcoin and Ethereum Trusts stockholders.

-Featured image from USTodayNews

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