FTX Values Creditors’ Claims Based on Crypto Prices During Exchange Collapse
New court documents reveal that FTX’s creditors will have their digital asset claims assessed using the low cryptocurrency prices at the time of the exchange’s collapse in November 2022. FTX’s lawyers propose converting the value of the crypto into cash based on the exchange rate on November 11th, the day when the now-defunct exchange filed for Chapter 11 bankruptcy. The crypto market had experienced a significant downturn during this period due to FTX’s turmoil and its impact on the sector. For instance, Bitcoin was trading at around $16,600 compared to its current price of $43,170.
FTX Pushes Back Against IRS Over Unpaid Taxes
In addition to dealing with creditors, FTX is also facing a battle with the US Internal Revenue Service (IRS) over unpaid taxes. The IRS is seeking billions of dollars from the bankrupt exchange, but FTX’s legal team argues that this would harm victims of the exchange’s fraud. They also claim that FTX does not owe any taxes since it consistently recorded losses throughout its three-year existence.
Hot Take: FTX Faces Challenges as It Navigates Bankruptcy Proceedings
As FTX continues to navigate bankruptcy proceedings, it faces significant challenges from both its creditors and the IRS. The determination of creditors’ claims based on low crypto prices during the exchange’s collapse could significantly impact the amount they receive. Meanwhile, the legal battle with the IRS over unpaid taxes further complicates FTX’s situation. These challenges highlight the complexities and legal uncertainties surrounding crypto exchanges during bankruptcy proceedings.
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