In Hunt for FTX Assets, Lawyers Locate Billions in Cash and Crypto

FTX also is planning to raise cash by selling some business operations in the Bahamas, Japan and Europe that might be viable with a capital infusion. And the company plans to work with officials in the Bahamas to market the company’s real estate holdings — a total of 36 properties valued at $253 million.

But it’s unclear just how much all those assets can sell for, or how quickly. In short, FTX customers and lenders still need to brace themselves for a multiyear legal drama before they see a return of any money, and they are likely to incur steep losses, experts say.

“It is possible creditors could be given the option of getting digital coin or cash. It depends on what the underlying crypto is,” said Kenneth Marshall, a financial adviser who has specialized in working with investors who have been victims of failed deals, including those involving crypto. “This could drag on for a long time.”

The latest disclosure about FTX assets has also put a spotlight on the work of Sullivan & Cromwell, one of the world’s most prestigious corporate law firms. It is not only representing FTX in the bankruptcy but also did legal work for the exchange before it collapsed.

On Friday, Andrew R. Vara, the United States Trustee in the bankruptcy proceeding, filed an objection to FTX’s decision to retain Sullivan & Cromwell, claiming that its work before the bankruptcy poses a potential conflict of interest. The trustee also has argued for an independent examiner to be appointed to investigate matters.

The law firm’s bankruptcy work doesn’t come cheap: Billing rates for Sullivan & Cromwell partners range from $1,575 to $2,165 per hour, according to an earlier court filing.

A representative for Sullivan & Cromwell pointed to a court filing on Tuesday that said the law firm had “worked tirelessly” to recover assets for the company. In a related court filing, a lawyer from the firm, Andrew Dietderich, defended the firm’s prior work for FTX and its ability to conduct an investigation into the events surrounding the collapse of the exchange.

Mr. Dietderich took issue with Mr. Bankman-Fried’s prior claim that he was pressured to put the company into bankruptcy. He said in the filing that Mr. Bankman-Fried tapped the restructuring lawyer John J. Ray III to replace him as chief executive after consulting with his father and three other lawyers.