IRS Tax Bill Puts Creditors at Risk: FTX Indicates Delay in User Fund Recovery

An escalating clash between the IRS and FTX has taken an interesting turn, with FTX’s legal representatives demanding proof for the substantial $24 billion tax claim against the bankrupt exchange. In a filing to a Delaware bankruptcy court, FTX contested the IRS’s assertion, dismissing it as baseless and excessive.

Contentious Claims: No Leg to Stand On?

As per the latest update, FTX is vehemently disputing the IRS’s claim, pointing out that the exchange never made any money or paid any dividends during its brief operational span. The lawyers for FTX pushed back against the outrageous $24 billion claim, highlighting that the exchange had already lost money and couldn’t even come close to making the claimed taxable income.

However, the IRS initially alleged that FTX owed a colossal sum of $44 billion. In September, they lowered that amount to $43 billion, and now they’ve settled on $24 billion. Yet, FTX doesn’t agree with this amount, calling it ridiculous and devoid of any real support.

IRS’s Standpoint Vs FTX’s Defense

The IRS has stuck to its estimates, insisting that it has the right to demand the amount and that FTX has to prove that its estimates are flawed. In response, FTX criticized the IRS’s stance as an “Alice in Wonderland argument” and questioned the IRS’s assumption that it was right.

The company FTX and its accounting firm, EY, have fully responded to the IRS’s requests and provided ample evidence to back their position. The lawyer also revealed that FTX has responded to 2,300 requests for information from the tax department, providing all the requested documents, except for some documents that will be transferred in January 2024.

And the Battle Continues.

As the court case unfolds, FTX aims to establish a structured program to make it easier to pay creditors and avoid further delays in paying victims. The forthcoming FTX bankruptcy case meeting on December 13 signals a pivotal turn of events.

The company FTX filed for bankruptcy in November after facing substantial challenges. Post-bankruptcy, FTX’s former CEO, Sam Bankman-Fried, was found guilty of scamming users and investors. Against this tumultuous backdrop, the clash with the IRS intensifies, foreshadowing a protracted court battle ahead.

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Qadir AK

Qadir Ak is the founder of Coinpedia. He has over a decade of experience writing about technology and has been covering the blockchain and cryptocurrency space since 2010. He has also interviewed a few prominent experts within the cryptocurrency space.

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