FTX lawyers are vigorously challenging the Internal Revenue Service’s (IRS) staggering $24 billion tax claim. This challenge introduces a significant hurdle in the already complex bankruptcy proceedings, with a crucial hearing scheduled for December 13.
The legal team’s demand for clarity on the IRS’s calculations adds another layer of uncertainty for creditors and stakeholders eagerly awaiting the case’s resolution.
FTX and IRS Clash Over Reduced $24 Billion Tax Claim
This latest development in the FTX bankruptcy case highlights a dynamic and contentious battle with the IRS. The significant reduction in the claimed amount, from an initial $44 billion in April to $24 billion now, suggests a complex assessment process by the IRS.
Despite these reductions, FTX’s legal stance remains unyielding, asserting that they owe nothing based on their financial losses and lack of distributed profits.
The outcome of this dispute holds substantial implications for FTX’s creditors. The IRS’s claim, if validated, could greatly reduce the funds available for distribution to those affected by the exchange’s downfall.
FTX’s legal team is firmly contesting the IRS’s assertion, labeling it as baseless and excessive, and underlining that any funds recovered by the IRS would decrease the compensation available to the victims of FTX’s collapse. This scenario adds another layer of complexity to an already intricate bankruptcy case, with significant stakes for all parties involved.
FTX Responds to IRS Queries Amid Legal Challenges
In this crucial stage of the FTX bankruptcy case, the exchange’s legal team is actively engaging with the IRS’s demands, responding to over 2,300 information requests and sharing key documents.
Their response criticizes the IRS’s approach as speculative and lacking solid proof. FTX is advocating for a more pragmatic and swift resolution to expedite compensation for its creditors.
As the case approaches a critical hearing on December 13, the situation is increasingly complex. FTX’s bankruptcy, declared last November after financial mishandlings by its former CEO, Sam Bankman-Fried, has placed it in a difficult position.
Amidst these legal challenges, the focus remains on ensuring fair and prompt repayment to the many creditors and stakeholders affected by the exchange’s collapse.
FTX Counters IRS Tax Claim Amid Audit, Urges Quick Resolution for Creditors
The IRS’s $24 billion claim against FTX relates to various taxes and penalties from 2018 to 2022, and this amount may still change as their audit continues.
In response to this claim, FTX and EY have addressed a vast number of IRS requests, providing most required documents, with the remaining to be submitted by January 15, 2024.
The IRS maintains that its tax estimations are presumed accurate, placing the burden of disproving these figures on FTX. In contrast, FTX has criticized this stance as illogical, comparing it to an “Alice in Wonderland argument.”
In a recent filing, FTX emphasized the need to approve a schedule it proposed, arguing that any delay in this process would indefinitely postpone compensations to the victims. The upcoming hearing on December 13 will be a critical moment in the ongoing bankruptcy proceedings.
Additionally, it’s notable that FTX’s bankruptcy filing occurred last November, following the conviction of its former CEO, Sam Bankman-Fried, for defrauding the platform’s users and investors on November 2.
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