U.S. officials will seize money from victims of bankrupt cryptocurrency company FTX Trading Ltd. unless a judge rejects the government’s demands for $24 billion in unpaid taxes.
The Internal Revenue Service (IRS) must substantiate its claims against FTX and show how it assessed the taxes it owed, FTX lawyers said in a new filing. The move is the latest in a months-long dispute between the IRS and the FTX Bankruptcy Foundation over how much the failed exchange and its affiliates owe the government in unpaid taxes.
FTX claims it doesn’t owe the IRS anything, but the agency wants $24 billion – more than three times the current amount of the estate – to repay creditors.
“The Alice in Wonderland claim has no legal basis.”
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The IRS initially said FTX owed more money and filed an initial claim in April for about $44 billion. In September, that number changed to $43 billion. By November, that figure had fallen to $24 billion.
The IRS alleges that FTX and its affiliates owe $24 billion in liabilities related to income taxes, employment taxes and penalties from 2018 to 2022. These are not final numbers yet as the IRS continues to audit. FTX called the lawsuit “absurd and without merit.”
FTX filed for bankruptcy last November, and former CEO Sam Bankman-Fried was found guilty of defrauding FTX users and investors in November of this year. FTX’s next bankruptcy hearing is scheduled for Wednesday, December 13. Bankman-Fried is scheduled to be sentenced on March 28, 2024. He could be sentenced to a total of 110 years in prison.