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FTX Lawyers Challenge IRS in $24B Bankruptcy Tax Dispute

FTX's bankruptcy case takes turn as lawyers challenge IRS's $24 billion tax claim, raising stakes for creditors as hearing on Dec 13 awaits.
FTX Lawyers Challenge IRS in $24B Bankruptcy Tax Dispute

In a recent development surrounding the FTX bankruptcy case, the company’s lawyers have put forth a strong challenge to the Internal Revenue Service (IRS). They are demanding clarity on how the IRS arrived at its $24 billion tax claim against the now-defunct cryptocurrency exchange. This dispute has added a new layer of complexity to FTX’s ongoing bankruptcy proceedings.

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A Sharp Decline in Claimed Amount

The IRS, which initially filed for $44 billion in April, has seen its claim fluctuate significantly over the past few months.  Moreover, by September, the amount was adjusted to $43 billion. In addition, in November, it was further reduced to $24 billion. Despite these adjustments, FTX’s stance remains firm since they argue that they owe nothing to the IRS, citing their history of financial losses and the absence of distributed dividends or earnings.

The IRS’s claim, if upheld, could significantly impact the funds available for distribution to FTX’s creditors. The exchange’s legal team is pushing back against what they describe as an “absurd and meritless” claim. They emphasize that any recovery by the IRS would directly diminish the potential payouts to the victims of the exchange’s collapse.

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FTX’s Counterarguments

FTX’s legal representatives have responded to the IRS’s inquiries, addressing over 2,300 information requests and providing the most requested documents. They criticize the IRS’s approach as overly presumptive and lacking concrete evidence. The exchange calls for a more reasonable and expedited resolution process to facilitate quicker distributions to its creditors.

With a critical hearing scheduled for December 13, the FTX bankruptcy case is at a pivotal juncture. The exchange, which declared bankruptcy last November following a series of financial missteps by its former CEO, Sam Bankman-Fried, is caught in a challenging situation. As it navigates through these legal complexities, the primary concern remains the fair and timely restitution to its numerous creditors and stakeholders.

Read Also: Coinbase Announces SEAM Token Listing and Airdrop

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Kelvin Munene Murithi

Kelvin Munene is a crypto and finance journalist with over 5 years of experience, offering in-depth market analysis and expert commentary . With a Bachelor's degree in Journalism and Actuarial Science from Mount Kenya University, Kelvin is known for his meticulous research and strong writing skills, particularly in cryptocurrency, blockchain, and financial markets. His work has been featured across top industry publications such as Coingape, Cryptobasic, MetaNews, Cryptotimes, Coinedition, TheCoinrepublic, Cryptotale, and Analytics Insight among others, where he consistently provides timely updates and insightful content. Kelvin’s focus lies in uncovering emerging trends in the crypto space, delivering factual and data-driven analyses that help readers make informed decisions. His expertise extends across market cycles, technological innovations, and regulatory shifts that shape the crypto landscape. Beyond his professional achievements, Kelvin has a passion for chess, traveling, and exploring new adventures.

Why trust CoinGape: CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights to our readers. Our journalists and analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.
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