LIVEIRS Deals Devastating Blow to FTX With $24 Billion Tax Claim, Crypto Exchange Pushes Back.
FTX has challenged the potentially fatal tax claims levied by the IRS last month for $24 billion. Image by Michael O’Keene, Adobe Stock.
According to a November 30 filing by FTX debtors, the IRS tax claims of $24 billion filed in early November are “completely unsubstantiated” and FTX has now requested that the claims be dismissed by the bankruptcy court.
Sam Bankman-Fried’s FTX was hit with a major setback in its bankruptcy proceedings when the IRS filed the staggering tax claims last month, presenting a potentially insurmountable obstacle for the exchange as it attempts to recover funds and reimburse customers.
FTX asserted that the IRS has failed to provide any factual or legal rationale to justify tax claims of such an immense magnitude, especially given FTX’s financial circumstances.
The filing stated that despite ongoing discussions and repeated requests, the IRS has not substantiated the basis for maintaining tax claims that vastly exceed FTX’s estimated earnings and debts. FTX argued that the IRS claims, which currently total 47 separate claims against 31 FTX debtors, were speculative and threatened to impede customer reimbursement efforts indefinitely.
The scale of the IRS tax claims against FTX, among the largest ever levied by the agency, has prompted urgent legal action by the exchange. FTX contends that the unexpected tax claims of approximately $24 billion could critically impact its objective of restoring funds to customers and creditors affected by FTX’s shocking collapse in November 2022.
According to analysts, IRS tax claims have the potential to completely derail FTX’s bankruptcy proceedings if not dismissed or dramatically reduced. Some experts view the claims as a potentially lethal blow to hopes of rehabilitating the exchange and question whether FTX can continue operations at all given the scale of the IRS action.
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