FTX Challenges IRS's 'Alice in Wonderland' Tax Allegations

• $24 Billion Unpaid Tax Claim on FTX by U.S. Government Faces Dispute
• Implications of IRS Demands on Recovery of Victims
• FTX's Argument Against the Taxes Claimed
• U.S. Stance on IRS Claims
• Bankruptcy Filing of FTX and Fraud Charges
• FTX's Rebuttal to IRS's Proposed Determination Process
• Related News: Proposed Crypto Tax Rules Revision Urged by U.S. Lawmakers

$24 Billion Unpaid Tax Claim on FTX by U.S. Government Faces Dispute

The U.S. government's outstanding tax claim of $24 billion against FTX$3.28 -5.38%, the insolvent cryptocurrency exchange, is solely dependent on the liquidation of victim's assets, according to a court document submitted on Sunday. The filing challenges both the amount claimed and the assertion that there are no other cash sources.

Implications of IRS Demands on Recovery of Victims

Without a judge's dismissal of the Internal Revenue Service's demand, the defrauded parties in the FTX scandal may receive minimal compensation. The case is scheduled for hearing later this Tuesday.

FTX's Argument Against the Taxes Claimed

The submission terms this as a baseless Alice in Wonderland argument. It further states, There are no grounds for the IRS's unfounded claim that the debtors owe taxes vastly exceeding any income they have ever made. This would essentially bar most of FTX's creditors, who are also fraud victims, from obtaining any significant recovery.

U.S. Stance on IRS Claims

In its response to the Debtors' proposed plan to calculate IRS claims last week, the U.S. clarified that it is not seeking a windfall, only to ascertain the accurate amount of the tax liabilities.

Bankruptcy Filing of FTX and Fraud Charges

Following a cascade of events instigated by a report that raised doubts about its financial status, FTX filed for bankruptcy in November last year. On November 2, 2023, a jury convicted FTX founder Bankman-Fried on seven counts of fraud and conspiracy linked to the exchange's operations. His sentencing is anticipated in February 2024.

FTX's Rebuttal to IRS's Proposed Determination Process

While FTX did not contest that the Court can and should determine the amount (if any) owed by the Debtors to the IRS, it did argue that the government's proposal for the determination process would unnecessarily protract the case administration.

Related News: Proposed Crypto Tax Rules Revision Urged by U.S. Lawmakers

Edited by Jonathan Stoker