Special Counsel in the Largest Ever Crypto Bankruptcy

Quinn Emanuel served as Special Litigation Counsel to FTX Trading Ltd. and its affiliated debtors in the largest ever crypto bankruptcy.  The FTX bankruptcy cases arose from one of the most spectacular frauds of our time.  Yet in October 2024, the Bankruptcy Court overseeing the chapter 11 cases confirmed FTX’s Plan of Reorganization, under which 98% of the creditors of FTX by number will receive approximately 119% of the amount of their allowed claims within 60 days after the effective date of the Plan, subject to know-your-customer and other distribution requirements.  FTX projects that the total value of property collected, converted to cash, and available for distribution will be between $14.7–$16.5B.

Quinn Emanuel played a critical role as Special Litigation Counsel in achieving this result.  Quinn Emanuel was engaged, alongside Sullivan & Cromwell, at the very start of these chapter 11 cases.  The Firm’s team, which spanned many U.S. and international offices, undertook a painstaking investigation and claims analysis of all of FTX’s in-house counsel, many of its insiders, all of Sam Bankman-Fried’s family members, over 150 different FTX pre-petition professionals and consultants, various financial institutions used by FTX, and over 500 separate “venture” investments that had been funded with commingled customer deposits.  Quinn Emanuel attorneys also investigated Sullivan & Cromwell (the debtor’s bankruptcy counsel) concerning its pre-petition representation of FTX.  In addition to these investigative efforts, the Firm filed claims against insiders and family members; sued Grayscale in a precedent-setting case that helped pave the way for EITFs in the crypto space; litigated with (and successfully negotiated an unprecedent cooperation deal with) the plaintiff group leadership that will pay creditors ongoing dividends; and litigated against a competing joint liquidator from The Bahamas and was able to reach a critical settlement that ultimately paved the way for plan confirmation.

The Firm’s investigation was assessed by a highly-respected court-appointed former U.S. Attorney.  The Examiner’s analysis concluded with a 210-page report, approving of Quinn Emanuel’s investigative efforts, which he found to be so thorough that almost no additional investigation by the Examiner was necessary.

While the Bankruptcy Court confirmed FTX’s Plan of Reorganization, the Firm’s investigatory and litigation-focused work continues.