FTX Bankruptcy: Judge Hastens Timeline for Customer Recoveries

• FTX's Debt Dispute Heading Towards Resolution
• IRS as the Largest Creditor
• FTX's Unresolved Tax Claim

FTX's Debt Dispute Heading Towards Resolution

In a recent bankruptcy hearing, a significant development was noted in the ongoing dispute between cryptocurrency firm FTX$3.28 -5.38% and its principal creditor. The presiding U.S. Judge John Dorsey from the Delaware Bankruptcy Court made moves towards expediting the resolution process for retrieving FTX customer's funds. The court scheduled a hearing early next year to determine the debt owed by the cryptocurrency exchange to the IRS, a major obstacle that has held back efforts to compensate the victims of the exchange.

IRS as the Largest Creditor

As the main creditor, the IRS's claim needs to be fully resolved before the victims of FTX can reclaim their losses. Although FTX's bankruptcy case is complex, the judge emphasized the importance of a speedy resolution. He voiced at the hearing, In bankruptcy cases, particularly tax court bankruptcy, we aim to reach conclusions quickly and with as much accuracy as possible, without excessive consumption of time and state or other creditors' resources.

FTX's Unresolved Tax Claim

In the ongoing dispute, the IRS alleges that FTX owes an unprecedented $24 billion in unpaid taxes, based on their calculations. The agency has persistently advocated for court recognition of its claim. However, it is yet unclear whether the court's estimation of FTX's tax debt would facilitate the IRS's recovery efforts. Being the first creditor usually paid out in corporate bankruptcy cases, the IRS was warned by Judge Dorsey to moderate its expectations for a multi-billion-dollar recovery.

The judge mentioned, The debtors may not owe any taxes. They might owe a small amount, they might owe a few million dollars, tens of millions of dollars. I don't know because we lack the evidence at this point. He urged the attorneys representing the IRS and FTX to thoroughly examine FTX's tax records and collaborate to bypass a potential trial.

Edited by Jonathan Stoker