An FTX creditor, Lidia Favario, recently expressed concerns about the excessive spending by bankruptcy managers handling the defunct exchange’s proceedings. According to a court filing, Favario raised issues about the extravagant expenses that were inconsistent with the Department of Justice (DOJ) guidelines on reasonable costs.
Specific examples of extravagant spending were cited by Favario, including expenses from law firms like Sullivan & Cromwell and Alvarez & Marsal (A&M), the financial advisory firm overseeing the bankruptcy process. Professionals from these firms were reported to have stayed at high-end accommodations such as the luxurious Hotel Du Pont in Delaware. Additionally, one A&M professional spent $971.74 for a single night at a luxury hotel in New York, while transportation costs raised eyebrows with one professional spending $1,733 on taxi rides during a single week in November 2022.
Furthermore, the estate reportedly paid significant amounts for taxis waiting for FTX CEO John Ray during his deposition, and business-class flights for professionals cost up to $4,279 per trip. Favario emphasized that such expenses showed a blatant disregard for the estate’s funds that are meant to compensate creditors who suffered severe financial losses due to FTX’s collapse.
To address these concerns, Favario urged the court to expand the scope of expense reviews to ensure accountability and adherence to DOJ guidelines. This, she argued, would promote fairness in the bankruptcy process by holding professionals to reasonable spending standards.
In addition to the concerns raised by Favario, another creditor, Sunil Kavuri, warned about a rise in scam emails targeting FTX creditors. These fraudulent messages aim to exploit confusion about the repayment timeline. Kavuri advised recipients not to click on any links and to rely only on the official claims portal for updates.
Kavuri highlighted the issue, stating, “Scam emails are being sent out. Do not click on links. FTX has not started repayments. Only go direct to the claims portal/official sites.” These scam emails appear to be linked to misinformation spread by certain crypto influencers who wrongly claimed that FTX repayments would begin in January 2025. However, official statements confirm that payouts are not expected before March 2025.
It is essential for FTX creditors to remain vigilant against such fraudulent schemes and to stay informed through official channels for accurate updates on the repayment process. The court’s attention to the concerns raised by creditors like Favario and Kavuri is crucial in ensuring a fair and transparent bankruptcy process for all parties involved.