Ongoing FTX Bankruptcy Case Takes Contentious Turn as Lawyers Dispute IRS Tax Claim
The bankruptcy case involving FTX, the failed crypto exchange, has taken a contentious turn as lawyers for the exchange push back against a $24 billion tax claim filed by the Internal Revenue Service (IRS). FTX’s attorneys argue that the claim is baseless and unsupported, asserting that there is no factual basis for the IRS to assert taxes owed in such a significant amount.
FTX Lawyers Argue Unsupported Tax Claim Would Hinder Victim Recovery
FTX’s lawyers contend that if the IRS claim were to be paid, it would prevent victims of the FTX collapse from receiving any meaningful assets. They argue that the IRS’s reliance on its own audit process would only delay distributions to those who have been truly injured. Paying the tax claim would consume most of the assets recovered for victims so far.
FTX Maintains Insufficient Earnings to Incur Taxes at Scale
FTX asserts that it has never earned amounts that would warrant incurring taxes anywhere near the scale of the IRS claim. The exchange emphasizes that it suffered billions of dollars in losses leading up to its collapse. FTX refers to the IRS’s claims as “Alice in Wonderland” logic without any legal grounds.
Disputing Allegations Could Prolong Bankruptcy Proceedings
The ongoing dispute with the IRS poses uncertainty regarding timelines and payouts for FTX users who lost funds. However, FTX urges moving forward with confirming reorganization plans to begin reimbursing victims in February. Challenging the allegations could potentially extend bankruptcy proceedings by another eight months as IRS audits continue.
Hot Take: The Fate of FTX Users Hangs on Resolution of IRS Claim
The outcome of the ongoing legal wrangling will determine whether the IRS claim against FTX holds legitimacy or is ultimately dismissed. This decision will have significant implications for the recovery of funds for FTX users who suffered losses. The dispute highlights the complexity of navigating bankruptcy proceedings involving cryptocurrencies and underscores the need for a swift resolution to ensure that victims receive their fair share of recovered assets.
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