IRS Looks to Kill FTX for Good

IRS Looks to Kill FTX for Good


Good day everybody,

Welcome to CryptoGod-1's blog on all things crypto. In this post I will be looking at a recent tax claim levied by the IRS against cryptocurrency exchange FTX for a staggering $24 billion, making it the largest ever claim levied by the agency and potentially scuppering any chance of FTX paying back any of its customers or creditors. 

 

 

IRS Filing

The internal revenue service (IRS) made a filing to FTX debtors in early November in which they are claiming $24 billion in unpaid taxes. On the 30th of November FTX challenged the potentially fatal tax claims levied by the IRS as “completely unsubstantiated” and FTX has now requested that the claims be dismissed by the bankruptcy court. The exchange founded by Sam Bankman-Fried suddenly found itself facing a major setback when the IRS filed the claims last month, meaning the sum could become a potentially insurmountable obstacle for the exchange as it works on recovering funds and reimbursing customers.

FTX have gone on to assert that the IRS has not provided any factual or legal rationale to justify the tax claims, especially of this astronomical figure, and have also pressed the fact of FTX's current financial circumstances. Within the filing it was stated that despite ongoing discussions and repeated requests there has been no substantiated basis from the IRS in maintaining the tax claim. The claim itself vastly exceed FTX’s estimated earnings and debts and FTX has argued that the IRS claims, which currently total 47 separate claims against 31 FTX debtors, were nothing more than speculative. The exchange also claimed the claim was made to impede customer reimbursement efforts indefinitely.

The claim is the largest ever levied by the agency and required urgent legal action by the exchange. FTX have contended that the unexpected tax claims of approximately $24 billion has the potential to critically impact their objective of restoring funds to customers and creditors following the exchanges bankruptcy in November 2022.

Analysts have noted that the claim has the potential to completely derail the bankruptcy proceedings if it is not dismissed or dramatically reduced. Some have even noted how this claim could end up dealing a lethal blow to hopes of rehabilitating the exchange and has led to questions over whether or not the exchange can continue operations given the scale of the IRS claim.

Within their motion to dismiss the IRS claim, FTX have shown they were very diligent in working to comply with all of the IRS requests for information, and have fulfilled over 1,100 requests from IRS audit teams. FTX also stated it supplied extensive documentation to the IRS to provide transparency and determine the accuracy of the tax claims.

While FTX have made repeated efforts to obtain details supporting the IRS calculations, the agency has reportedly failed to provide a factual foundation for the extraordinary tax liability cited. Given this position, FTX have maintained that the lack of substantiation from the IRS indicates that the claims made against the exchange are both erroneous and inflated.

The crypto industry had already been in a state of uncertainty following the collapse of FTX last year, and the recent news of Binance has further added fuel to the fire, but the IRS action against the exchange and its impact of their bankruptcy proceedings could deal a huge blow to any attempt of restoring confidence in crypto investors. The tax bill will certainly add another layer of complication in FTX’s attempted rehabilitation. The outcome of FTX’s motion to dismiss the tax claims worth approximately $24 billion could determine whether the exchange can proceed with its bankruptcy reorganisation. If not, this may very well be the final and permanent nail in the coffin for FTX from these troubles with US tax authorities.

 

 

 

Have a great day,

Peace. CryptoGod-1.

 

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cryptogod-1
cryptogod-1

Writer, designer, creator, and life enthusiast. I love to read and write and enjoy sharing my passion for crypto, sports, literature and everything and anything I can enjoy in life.


CryptoGod-1 : Crypto & Blockchain
CryptoGod-1 : Crypto & Blockchain

Enthusiast here looking to share my ideas, thoughts, analysis, and experience when it comes to all things crypto

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