KEY POINTS
- Since May 2023, the IRS has been trying to collect tax arrears from the now-bankrupt crypto firm and its sister company Alameda Research
- IRS had initially claimed $44 billion across more than 40 claims against FTX and its subsidiaries
- FTX filed a lawsuit against SBF's parents in September accusing them of exploiting "their access and influence"
The now-bankrupt cryptocurrency exchange platform FTX warned of a potential slowdown of the return of customers' funds amid the proposed $24 billion tax bill from the United States Internal Revenue Service (IRS).
A court filing made by FTX over the weekend claimed that U.S. officials will take money away from victims of the crypto firm, FTX Trading Ltd., unless a judge rejected the government's claim of $24 billion in unpaid taxes.
The filing further argued that FTX Debtors incurred billions in losses and "never earned anything anywhere near amounts that could support the IRS Claims for $24 billion in taxes."
"These cases present a zero-sum game. The only source of recovery for the IRS is by taking recoveries away from victims. As there is no basis to assert any tax claim against the Debtors, the IRS's reliance on its own processes only serves to delay distributions to those truly injured," FTX further said in the filing.
Since May 2023, the IRS has been trying to collect tax arrears from the now-bankrupt crypto firm and its sister company Alameda Research, both of which were founded by the disgraced crypto mogul Sam Bankman-Fried (SBF).
The U.S. tax authority had initially claimed $44 billion across more than 40 claims against FTX and its subsidiaries, but then brought the figures down to $24 billion.
FTX, however, in its filing to a Delaware court, called the IRS' tax claim "meritless," and added it would significantly impact the funds it earnestly clawed back from previous transactions and activities of its former CEO to reimburse impacted users.
The crypto firm also said, "This Alice in Wonderland argument has no support in the law."
"In the Objection, the United States notably does not even attempt to defend the IRS's initial claims for $43 billion, nor its now-pending claims for $24 billion; in fact, it puts forward no theory whatsoever by which FTX could have even one dollar of additional prepetition tax liability—much less anything close to the enormous, unsubstantiated amounts asserted by the IRS. There is simply no basis to support the IRS's meritless claims that the Debtors owe tax in an amount that is orders of magnitude greater than any income the Debtors ever earned and that would effectively prevent most of FTX's creditors—themselves victims of fraud—from obtaining any meaningful recovery. It just makes no sense that a company that lost many billions of dollars would have a substantial tax liability, much less one for $24 billion," the filing read.
In September, FTX had also filed a lawsuit against Joseph Bankman and Barbara Fried, parents of SBF, accusing both of exploiting "their access and influence within the FTX enterprise to enrich themselves."
#XRPCommunity #XRP Below is the FTX complaint against Joseph Bankman and Barbara Fried “to recover damages caused by fraudulent transfers, breaches of fiduciary duties . . . unjust enrichment . . . and other wrongdoing,” etc.https://t.co/hyJO2j5v0v
— James K. Filan 🇺🇸🇮🇪 (@FilanLaw) September 19, 2023
The lawsuit aims "to recover damages caused by fraudulent transfers, breaches of fiduciary duties, aiding and abetting breaches of fiduciary duty, unjust enrichment, knowing assistance or knowing receipt, and other wrongdoing, and to avoid and recover fraudulent transfers," as well as punitive damages resulting from "conscious, willful, wanton, and malicious conduct."
