In a recent development, the Internal Revenue Service (IRS) in the United States has presented FTX, the bankrupt cryptocurrency exchange, with a hefty tax bill amounting to $24 billion. FTX, currently undergoing bankruptcy proceedings, has vehemently contested the proposed amount, characterizing it as “enormous” and lacking substantiation.
FTX argues that the IRS’s claims lack merit and a valid basis, challenging the proposed tax bill on multiple fronts. The exchange contends that this substantial tax liability, if enforced, would severely impede the chances of most creditors, who are themselves victims of fraud, from obtaining any meaningful recovery.
In a court filing, FTX expressed its skepticism about the IRS’s assertions, stating that the specified amount was not readily determinable and could not be reliably estimated. The cryptocurrency exchange further criticized what it referred to as the U.S. official’s “Alice in Wonderland” argument, claiming that it lacked legal support. According to FTX, the burden lies with the debtors to disprove the IRS’s unexplained $24 billion claims.
FTX also highlighted the IRS’s portrayal of the situation as complicated, suggesting that numerous issues were “necessary to determine the Debtor’s tax liability” and that the resolution could take months. In response, FTX argued, “This issue is not complicated at all. The Debtors petitioned for bankruptcy because they lost massive sums of money, and those enormous losses do not give rise to any tax liability, much less a multi-billion dollar tax liability.”
It’s worth noting that in October, FTX and affiliated debtors proposed a settlement for customer property disputes, potentially allowing customers to reclaim 90% of their lost assets in 2024. The ongoing legal battle between FTX and the IRS adds another layer of complexity to the exchange’s bankruptcy proceedings.
