The IRS’ Astronomical $24 Billion Tax Claim Casts Dark Cloud Over FTX Victim Recovery
The United States Internal Revenue Service (IRS) has pushed forward a staggering $24 billion tax claim against the beleaguered crypto exchange FTX and its sister company, Alameda Research.
The IRS had initially asserted a monumental $44 billion across 45 separate claims but revised the figure down to $24 billion in an ongoing pursuit of tax arrears from the crypto entities since May.
The latest development unfolded in a recent filing by FTX in the U.S. Bankruptcy Court for the District of Delaware. In the filing, the exchange vehemently dismissed the IRS claims as baseless, warning that the proposed tax bill would effectively drain resources meant for compensating victims of the FTX debacle.
FTX minced no words in denouncing the IRS claims, asserting, “That would effectively prevent most of FTX’s creditors—themselves victims of fraud—from obtaining any meaningful recovery.”
The firm’s legal representatives further rebuffed the IRS assertions, stressing on the lack of foundation for the tax agency’s claims.
“There is simply no basis to support the IRS’s meritless claims that the Debtors owe tax in an amount that is orders of magnitude greater than any income the Debtors ever earned,” FTX’s lawyers countered, highlighting the detrimental impact on those afflicted by the FTX collapse.
The standoff between FTX and the IRS has intensified, with the latter still in the midst of an extensive audit process that may extend for an additional eight months, delaying potential resolutions.
Amid this legal skirmish, scheduled for December 12, both FTX and the U.S. government are poised to spar over the legitimacy of the mammoth $24 billion claim in court, a crucial showdown that could significantly sway the fate of the compensation meant for affected FTX users.
While this legal saga unfolds, FTX administrators have managed to recuperate approximately $7 billion in assets, a fraction of the colossal sums at stake. This recovery includes a substantial $3.4 billion worth of cryptocurrencies, underscoring the ongoing efforts to salvage what remains amidst the fallout.
Notably, the former CEO of FTX, Sam Bankman-Fried, faces the aftermath of a legal battle, having been convicted on seven fraud-related charges in November. Bankman-Fried presently resides in the Brooklyn Metropolitan Detention Center, awaiting sentencing scheduled for March 28, 2024.
