The ongoing financial turbulence at FTX, which followed the departure of its founder Sam Bankman-Fried (SBF), faces another massive hurdle as the Internal Revenue Service (IRS) contends a staggering $24 billion tax claim. This claim, if substantiated, could potentially obliterate any prospects of creditor recovery for the beleaguered exchange.
IRS Claims $24 Billion Tax Bill
The post-SBF leadership at FTX embarked on an extensive search through the exchange’s databases, successfully uncovering approximately $7 billion in assets, nearly half of which comprise cryptocurrencies. However, amidst this recovery effort, the IRS has significantly added to FTX’s woes. The IRS, after submitting multiple revisions to the original claim, asserts that the tax audit remains ongoing, with the final sum owed still subject to alterations.
FTX’s Struggle Against the Tax Claim
Initially facing a daunting $44 billion IRS claim, this amount was later revised down to $24 billion, distributed across various entities within the FTX conglomerate. A considerable portion of this alleged debt pertains to unpaid partnership taxes, amounting to $20.4 billion, while the remaining sum involves payroll and other income tax obligations.
Also Read: FTX Bankruptcy Update: Revised Reorganization Plan Set for Mid-December 2023
Legal Clash in Court Today
In a bid to counter the astronomical tax claim, FTX contested the figures, contending that the sum is grossly disproportionate to its earnings. Despite FTX’s attempts to dismiss the claim, the court rejected their argument. However, the exchange is now seeking a more reasonable, accurately substantiated figure from the IRS.
Today, the 12th of December, marks a pivotal moment as FTX and the IRS are set to confront each other in court. Notably, FTX has shifted its stance from pursuing a complete dismissal to urging for a more justifiable, comprehensible, and realistic tax claim that aligns with the platform’s historical earnings.