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.
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."
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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.
