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- FTX lawyers continue to dispute the behemoth amount claimed by the Internal Revenue Service (IRS) from the now-defunct crypto exchange.
- This amount could significantly impact the potential payouts to victims of the exchange’s collapse.
The Internal Revenue Service (IRS) is adding a layer of complexity to the ongoing FTX bankruptcy case. The agency, which is mandated with the responsibility of collecting U.S. federal taxes, is seeking around $24 billion from the defunct FTX crypto exchange. The legal tussle began in April when the agency filed a claim seeking around $44 billion. However, this was adjusted to $43 billion by September and has progressively fluctuated to $24 billion.
Despite this huge reduction, FTX lawyers continue to dispute and question the method used by the IRS to get this figure. Central to the lawyers’ argument is the history of financial losses and the absence of distributed dividends or earnings. These developments could have serious implications on the potential payouts to victims of the exchange’s collapse, more so, creditors. As such, interested parties have been calling for a fair and equitable process that will ensure a timely restitution for creditors and stakeholders.
This behemoth claim further jeopardizes any possible relaunch of the exchange, now dubbed FTX 2.0. As CNF reported, lawyers and the current CEO have been in discussions with potential investors looking to relaunch the exchange as soon as 2024.
A key hearing is scheduled for December 13th with the exchange currently cooperating with the IRS, addressing over 2,300 information requests and availing requested documents to the agency. The lawyers have described the agency’s claim as a “mere speculation and conjecture.” They further affirm that the IRS claims are at $0.00. Focused on distribution to creditors, the exchange is calling for an efficient resolution with the IRS, as it anticipates restitution to begin in mid-2024.
The developments come just months after a jury found FTX founder and former CEO Sam Bankman-Fried guilty of two counts of wire fraud and five counts of conspiracy ranging from commodity fraud to money laundering. His sentencing is scheduled for March 28th, 2024, with the former executive facing nearly 110 years behind bars.
This intricate case against FTX comes as no surprise to a majority of U.S-based crypto holders. For them, they have seen the agency take on a greater interest in the industry and increasingly introduce new rules. According to a Bloomberg report, the IRS Criminal Investigation Unit is taking on more crypto tax cases. It notes that half of the active crypto cases involve tax. CNF reported last month that the IRS is embarking on a significant cryptocurrency surveillance effort, raising concerns about the potential consequences for individuals involved in the digital currency space.
