How much money did FTX's bankruptcy lawyers make themselves without compensating domestic victims?

Author: Sleepy, BlockBeats

On July 4, 2025, Sunil, a representative of FTX creditors, posted a screenshot of a document regarding FTX's bankruptcy liquidation on social media. The document indicated that FTX would seek legal advice and that if users belong to restricted foreign jurisdictions, their claim funds may be confiscated.

Sunil also announced a piece of data: among the claim funds from "restricted countries," 82% come from Chinese users.

However, because cryptocurrency trading is not allowed in the country, these users may be classified as "illegal," resulting in the forfeiture of their claims. This means that not only will these users be unable to recover their losses, but their assets may also be "legally confiscated."

The community is in an uproar, questioning the compliance reasons of the liquidation team, which are merely excuses to shirk responsibility. Some have referred to FTX's decision as a "American-style robbery," lamenting that "the Chinese are worse than dogs," with deep disappointment and helplessness evident in their words. Some believe that although China has strict restrictions on cryptocurrency trading, users' funds should not be directly confiscated, and that FTX's decision lacks clear legal basis.

After such a statement that could rewrite the understanding of global creditor rights, what the outside world is most concerned about is not just whether FTX is "acting according to the law", but who is making the decisions, on what standards they are acting, and who the ultimate beneficiaries are.

Who is the person taking over?

The team taking over this wreckage is a bankruptcy restructuring crew from Wall Street: led by restructuring veteran John J. Ray III as CEO, and spearheaded by the esteemed law firm Sullivan & Cromwell (hereinafter referred to as S&C), forming the liquidation team.

John J. Ray, a veteran in the business of dealing with corporate corpses. He previously took over the Enron bankruptcy case, bringing nearly $700 million in revenue to S&C during that "trial of the century."

This time, he brought the same law firm team to take over FTX.

High salary is not the issue; the question is how high it is. According to public documents, the hourly rate for S&C partners can reach as high as $2,000, while John Ray himself charges $1,300 per hour. According to data disclosed by Bloomberg, as of early 2025, the total legal service fees claimed by S&C in the FTX Chapter 11 bankruptcy proceedings have reached $249 million.

The assets that should belong to all creditors are being sliced away by a "professional team." This is also why FTX creditors have been accusing: "They are repeating the Enron script."

Another ironic aspect is the speed at which FTX announced its bankruptcy. It wasn't until SBF's full testimony draft was leaked after he testified in Congress that we learned how he was "hunted" just two days before the bankruptcy filing.

A draft of testimony prepared by SBF (Sam Bankman-Fried) for submission to Congress shows that the general counsel for FTX.US, Ryne Miller, who also comes from S&C, worked closely with the liquidation team to force SBF and his management to quickly proceed to Chapter 11 bankruptcy.

SBF wrote in his testimony: "People from Sullivan & Cromwell and Ryne Miller sent me a lot of threats, they even harassed my friends and family... Someone came to me crying."

But he no longer has the chance to turn back. The five emails he sent were never replied to by John Ray.

He is just the previous protagonist in this exquisite plunder.

The bankruptcy filing was pressed in the midst of overnight bombings, panic, and isolation. He had intended to continue fundraising, trying to salvage the situation, but he was prematurely kicked off the stage by the legal advisor he had brought in.

But the real game—about who takes over this company and who shares its legacy—has only just begun.

Who is dividing the legacy of FTX?

The way this bankruptcy liquidation team is handling the disposal of FTX's historical portfolio is both infuriating and perplexing.

These portfolios were important pieces in SBF's layout of the "effective altruism" dream and were once considered valuable reserves for FTX's potential resurgence. However, they were almost "liquidated" in a wholesale manner by John Ray's team, with most selling prices far below their true value.

The three most glaring transactions are enough to glimpse the absurdity of the entire liquidation:

1. Cursor: $200,000 exchanged for $500 million sighs

Cursor, hailed by AI as the "Vibe coding神器", received a seed investment of $200,000 from FTX, and was sold at its original price during liquidation. On the surface, it seems like no loss, but considering that Cursor has been reported by authoritative media like TechCrunch and Bloomberg to have a valuation as high as $9 billion, this selling price is indeed outrageous.

According to conservative estimates, FTX could have recovered at least $500 million in equity gains, but it was given away due to the actions of the legal team. There's even a sarcastic saying in the industry that it was "faster to make money than Trump," directly pointing to how this asset was sold off in a "particularly shady" manner.

2. Mysten Labs / SUI: $96 million sold a $4.6 billion public chain dream

Mysten Labs and its developed SUI chain is considered the next Solana, with extremely high public chain scalability.

FTX acquired equity in Mysten and subscription rights for 890 million SUI tokens for approximately $100 million in 2022, but the liquidation team disposed of this asset for $96 million in 2023, citing "quick capital recovery" as the reason.

At its peak, this batch of SUI was valued at over 4.6 billion dollars, meaning that the 96 million dollars at that time only accounted for 2% of its future value.

The community jokingly remarked that if SBF saw the SUI market trends while in prison, he would probably be so angry that he would吐血.

3. Anthropic: $1.3 billion to sell off a $61.5 billion giant

Anthropic, founded by former OpenAI executives, focuses on AI safety, with SBF personally investing 500 million dollars and holding approximately 8% of the shares.

The liquidation team sold all equity in two phases in 2024, totaling $1.3 billion. Initially, the outside world considered this a decent monetization result, but less than a year later, Anthropic's valuation soared to $61.5 billion. Based on this calculation, the value of FTX's 8% stake is close to $5 billion.

In other words, the bankruptcy liquidation team missed at least 3.7 billion dollars in additional returns.

FTX's investment vision is correct, and almost no one would deny it. They fired their shot just before the windfall arrived, betting at the moments when these companies were most overlooked, and secured core shares.

But after the collapse of FTX, these bets were treated as scrap metal.

In addition to these three typical cases, the FTX liquidation team consistently "sold off" LedgerX, Blockfolio, SOL token bulk packages in transactions, causing huge controversy.

For example, when clearing and auctioning SOL tokens in 2024, institutions like Galaxy Trading and Pantera Capital bought in at low prices, and then the price of SOL skyrocketed, resulting in astonishing profits, while the original creditors could only watch the opportunity slip away. According to reports from the Financial Times, Cointelegraph, and others, FTX is believed to have missed out on potential gains of at least tens of billions of dollars in the disposal of quality assets.

Why did this concentrated and short-term "liquidation sell-off" occur? John Ray stated that it was to "lock in funds promptly and avoid volatility risks," but industry analysts pointed out that such reasoning does not explain why the large-scale discounts were only directed at familiar institutional friends, and many assets doubled in value in less than 6 months.

Thus, conspiracy theories emerged, claiming that the liquidation team sold valuable assets to familiar funds in a very short time, allowing themselves to collect exorbitant legal fees and quickly conclude the cases, ultimately making a huge profit. The assets that originally belonged to the creditors were transferred at low prices to those closer to the centers of power under the framework of "reasonable compliance."

The value of those shares, tokens, and options that were transferred at a low price continues to grow; yet those who were supposed to hold on to this growth can only watch the future being seized by others through the publicly available PDF.

Bankruptcy liquidation or "legal plunder"?

No industry is better at forgetting than the crypto industry. The market is currently back in pursuit of AI, stablecoins, and RWAs, as if the crisis of 2022 has passed, but this process of liquidation is far from over.

Over the past three years, FTX's assets have been sliced, packaged, and auctioned off, stripping a platform of all its future, leaving only an empty shell.

The scale and complexity of FTX's bankruptcy liquidation are enough to be recorded in the annals of global cryptocurrency history, but what is truly worth writing into textbooks is the collective disillusionment of creditors with the legal trust system.

On one hand, John Ray and the clearing lawyer team represented by S&C have legally charged exorbitant fees, making it almost impossible to hold them accountable in court. On the other hand, they have shielded themselves with indemnity clauses, meaning they will not have to bear responsibility even if they are questioned in the future about "malicious liquidation."

For the tens of thousands of retail investors who were devastated by the FTX crash, this is not redemption but a second injury. You might miss the market opportunity, but being deprived of a fair chance to recover is the cruelest.

Currently, FTX's bankrupt assets are expected to be globally liquidated and distributed with a total amount of between 14.5 billion to 16.3 billion USD. However, if users from regions like China are ultimately unable to successfully claim their compensation, it would signify yet another unresolved tragedy: some individuals will be completely excluded from the legal system, while the funds that originally belonged to them are devoured by the cumbersome procedures of the law and the gray areas of bankruptcy lawyers.

Moreover, the new proposal submitted by the FTX team to the bankruptcy court contains hidden clauses that exempt the advisors from liability, making it nearly impossible for creditors to sue or file complaints.

For the industry, the collapse of FTX may just be another bottom of a cycle, but for the people trapped in it, especially the tens of thousands of individual investors in China, it is not only the loss of funds but also the end of hope.

The group of lawyers and consultants known as the "Professional Liquidation Team" can decide the fate of billions of dollars in assets with just a few lines of text, yet no one is left to give these ordinary investors any chance of turning things around.