In a move that can only be described as startling, the U.S. Internal Revenue Service (IRS) is laying a nearly $44 billion burden on the bankrupt cryptocurrency exchange, FTX, and its associated entities. While the IRS might claim it’s all in a day’s work, critics argue the IRS’s approach is heavy-handed and overly aggressive.
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The IRS has audaciously lodged 45 claims against various FTX companies, as per bankruptcy documents dated April 27 and 28. These targeted companies include West Realm Shires (the legal identity of FTX.US), Ledger Holdings (the parent company of LedgerX and LedgerPrime), and Blockfolio, among others.
The claim that stands out is a whopping $20.4 billion against Alameda Research LLC, coupled with another $7.9 billion claim. Additionally, Alameda Research Holdings Inc. is being slapped with two claims totaling $9.5 billion. These figures make one wonder if the IRS is indeed playing fair or if this is a case of government overreach.
These claims have been filed under the “Admin Priority” classification, a move that could potentially place the IRS ahead of other creditors in the bankruptcy case. This priority status could lead to the IRS being paid before others who may have equally valid or even more pressing claims.
Interestingly, the IRS’s $20.4 billion claim against Alameda Research LLC apparently covers around $20 billion in partnership taxes. The rest is made up of withheld income taxes and payroll taxes, adding millions to the bill.
As expected, an IRS spokesperson has declined to comment, citing federal law that prohibits the IRS from confirming or denying any correspondence related to a taxpayer’s case. But one can’t help but ask, is the IRS really out for justice, or is this another example of an overzealous tax agency asserting its authority?
FTX’s bankruptcy attorneys have discovered more than $5 billion in various assets as of a January 2023 hearing. The company initially estimated its total assets to be between $1 billion and $10 billion, a figure that has since been revised as more funds have been found. But even so, the IRS’s claims are far from insignificant and raise questions about the fairness of the IRS’s approach.
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