FTX Bankruptcy Judge Takes Step to Shorten Timeline for Customers’ Recoveries

A
federal
judge
took
steps
to
end
a
protracted
dispute
between
FTX
and
its
largest
creditor
at
a
bankruptcy
hearing,
signaling
the
court
could
try
to
speed
up
efforts
to
recover
FTX
customer’s
funds
from
the
failed
crypto
firm’s
estate.

U.S.
Judge
John
Dorsey,
from
the
Delaware
Bankruptcy
Court,
scheduled
a
hearing
for
early
next
year
to
calculate
the
crypto
exchange’s
debt
to
the
IRS,
a
sticking
point
that
has
stagnated
efforts
to
remunerate
the
exchange’s
many
victims.
As
FTX’s
largest
creditor,
the
IRS’
claim
must
be
resolved
before
FTX
victim’s
can
recover
their
losses.

During
the
bankruptcy
hearing,
the
judge
said
that
while
FTX’s
bankruptcy
was
“a
complicated
case,”
it
still
needs
to
be
resolved
more
quickly.

“The
idea
here
in
bankruptcy,
tax
court
bankruptcy,
is
we’re
trying
to
get
to
conclusions
occlusions
quickly
and
be
as
accurate
as
possible
without
wasting
a
lot
of
time
and
resources
of
the
state
or
the
other
creditors,”
he
said
near
the
end
of
the
hearing.

Read
more:



FTX
Disputes
IRS’s
‘Alice
in
Wonderland’
Tax
Claim

The
IRS
alleges
the
crypto
firm
owes
$24
billion
in
unpaid
taxes,
based
on
its
own
calculations,
and
it
has
doggedly
fought
for
court
recognition
of
its
claim.

It
is
unclear
whether
the
court’s
estimate
of
FTX’s
tax
debt
will
boost
the
IRS’
recoveries.
The
IRS
is
usually
among
the
first
creditors
to
receive
payouts
in
corporate
bankruptcy
cases,
but
Judge
Dorsey
has
warned
the
agency
it
should
temper
its
expectations
of
a
multi-billion-dollar
recovery.

“You
might
not
get
to
a
point
where
the
debtors
owe
any
taxes.
Might
be
they
owe
a
little
bit
of
taxes,
might
be
they
owe
a
few
million
dollars,
tens
of
millions
of
dollars,”
he
said.
“I
don’t
know
at
this
point
because
they
don’t
have
the
benefit
of
the
evidence.”

He
advised
the
various
attorneys
for
the
IRS
and
FTX
to
dig
through
FTX’s
tax
information
and
work
together
to
avoid
going
to
a
trial.