Key points from the FTX hearing: $24 billion claim by the US tax agency and dispute with LayerZero.

At 1:00 AM Beijing time on December 14th, the United States Bankruptcy Court for the District of Delaware will hold a hearing on the agenda of the bankruptcy case of FTX Trading Ltd. (Case No. 22-11068). The purpose of the hearing is to discuss various matters related to the bankruptcy case, including deferred matters such as motions and objections, as well as review of the third interim fee application submitted by all parties.

This hearing will consider various applications and documents related to the debtor and the debtor's property, including claims by creditors, attorney fees, financial advisor fees, etc. The hearing will be presided over by Judge John T. Dorsey in the Federal Bankruptcy Court in Delaware. All participants, including lawyers and witnesses, must be present in person. Non-participants can register in advance to watch the hearing via Zoom.

In the bankruptcy case of FTX Trading Ltd. (Case No. 22-11068), the plaintiff is:

- FTX Trading Ltd.- Maclaurin Investments Ltd. (formerly known as Alameda Ventures Ltd.)

- West Realm Shires Services, Inc.

The defendant is:

- LayerZero Labs Ltd.

- Ari Litan

- Skip & Goose LLC

The submitted hearing agenda explains the postponed matters, resolved matters, upcoming matters, and mid-term expense applications. Some motions and objections have been postponed to the hearing on January 25, 2024. Among them:

Delayed Matters

Discovery subpoenas involving the debtor and the unsecured creditors committee, the lifting of the automatic stay motion by Island Air Capital and Paul F. Aranha, the authorization examination motion by the debtor, the claim objection filed by creditor Ross Rheingans-Yoo, and the motion to submit claims after the claims bar date, etc.

已解决的事项

translates to

Solved Issues

Includes various opposing opinions and proposals that have been approved to enter the court for requested relief measures and so on. In addition, FTX Trading Ltd. et al. v. LayerZero Labs Ltd. et al., case number Adv. No. 23-50492 (JTD), has entered the case management plan and schedule.

Mid-term Expense Application

Multiple requests from different entities are included, including the first and second monthly and mid-term fee applications from inspectors and Godfrey & Kahn, S.C. law firm, the third mid-term fee application from Perella Weinberg Partners LP and Jefferies LLC, and other fee applications from multiple entities such as FTI Consulting, Inc. The requests seek compensation and expense reimbursement for services and fees incurred during a specific period.

Upcoming Events

A motion has been filed listing the orders from the US Department of the Treasury - Internal Revenue Service for the development of an estimated claims schedule and procedure. The response deadline for this matter is December 6, 2023. Specifically, it concerns the issue of claim estimates by the US Internal Revenue Service. A motion regarding the debtor was mentioned, requesting court approval of a schedule and procedure to estimate the claims of the US Internal Revenue Service. The document number for this motion is D.I. 4204 and was submitted on November 29, 2023.

In addition, it also mentioned the US Internal Revenue Service's objection to the debtor's motion and the Official Unsecured Creditors Committee's statement in support of the debtor's motion. These documents and motions were submitted as part of the bankruptcy case and will be discussed at a hearing on December 13, 2023.

Previously, FTX's lawyer stated in a new filing submitted to the Delaware bankruptcy court that the US Internal Revenue Service (IRS) should verify its claim against FTX and explain how it calculated the so-called overdue taxes. This is the latest step in the months-long dispute between the IRS and FTX's bankruptcy assets, with the focus of the controversy being how much unpaid taxes this bankrupt trading platform and its affiliated companies owe the government.

Although FTX claims to have no outstanding debts to the IRS, the tax agency still hopes to collect up to $24 billion in unpaid taxes, which is several times more than the amount of assets it currently holds. Lawyers wrote in the document that FTX has never distributed dividends or profits in its three-year lifespan, and "has never earned an amount sufficient to support the IRS's demand for $24 billion in taxes." Instead, they added, FTX has lost a lot of money.

与 LayerZero Labs 纠纷

Translation:

Dispute with LayerZero Labs

The FTX Foundation filed a lawsuit against LayerZero Labs in September of this year, seeking to revoke a $45 million transaction reached during the company's collapse. The lawsuit primarily involves a transaction reached between former Alameda Research CEO Caroline Ellison and LayerZero Labs on November 7, 2022 (four days before filing for bankruptcy protection). As part of the transaction, Alameda agreed to sell its 5% stake in LayerZero (valued at $150 million based on LayerZero's current valuation) in exchange for LayerZero waiving the $45 million loan it owed to Alameda. The lawsuit alleges that FTX was insolvent at the time of the transfer, making these transactions fraudulent under bankruptcy law and revoking the transaction for the benefit of the bankruptcy estate.

In addition, the lawsuit also attempts to recover the withdrawals made by LayerZero and its former COO Ari Litan from FTX within 90 days before FTX filed for bankruptcy. It is alleged that LayerZero illegally withdrew $21.37 million from FTX using internal information just before FTX closed and banned withdrawals. In addition, FTX is also seeking to recover approximately $13.07 million and $6.65 million from Ari Litan, former COO of LayerZero Labs, and his Skip & Goose respectively.

LayerZero founder and CEO Bryan Pellegrino responded to the FTX lawsuit, stating that the entire lawsuit is filled with unproven allegations. LayerZero has been in communication with FTX's liquidator for nearly a year and has made several attempts to proactively resolve the issue of share ownership, but has been ignored. The purpose of their claim is not to solve the problem, but to prolong the process and obtain more legal fees. Pellegrino also stated that any claims of "illegal" withdrawals are incorrect.

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