The IRS has lodged tax claims totaling an astonishing $44 billion against the bankrupt cryptocurrency exchange FTX and its associated entities.
In recent bankruptcy filings, the IRS has submitted 45 claims against FTX companies for unpaid taxes, posing a significant concern for FTX creditors as the agency asserts priority over other creditors in the bankruptcy proceedings.
Among the claims, the IRS has filed substantial amounts of $20.4 billion and $7.9 billion against Alameda Research, a sister company of FTX, for unpaid partnership taxes. Additionally, two claims totaling $9.5 billion have been made against Alameda Research Holdings Inc. These claims have been filed under “administrative priority”, granting the IRS precedence over unsecured creditors in the bankruptcy process.
It’s done procedurally to make sure claim isn’t disallowed for filing against incorrect entity.
Despite Alameda Research being headquartered in Hong Kong, its key executives and employees, including Sam Bankman-Fried and Caroline Ellison, hold American citizenship. Unlike many other countries, the United States follows a taxation-by-citizenship system, where U.S. citizens are obligated to pay taxes on their global income, irrespective of their residency or the duration they spend in the country each year. For partnership entities like Alameda Research, taxes are not settled at the partnership level; instead, they are transferred to the partners and subjected to taxation on an individual basis.
Recent Happenings with FTX
In the most recent twist of events in the FTX saga, Sam Bankman-Fried, the embattled founder of the exchange, has requested the dismissal of a significant portion of the criminal charges leveled against him by federal prosecutors. SBF’s legal team, in a recent filing with the federal court in the Southern District of New York, argued that a number of the charges were exaggerated and transformed what should be civil and regulatory matters into federal offenses.
Moreover, there has been notable progress in the plans to relaunch FTX, with the platform successfully recovering more than $7.3 billion in cash and liquid cryptocurrency assets. In an encouraging development, Tribe Capital, a venture firm, has expressed interest in spearheading a fundraising campaign worth $250 million to support the revitalized platform.
