The United States Department of Treasury and Internal Revenue Service (IRS) have filed 45 claims worth $44 billion against bankrupt cryptocurrency exchange FTX and its subsidiaries. The claims were filed under “administrative priority,” enabling the IRS to supersede t...
The United States Department of Treasury and Internal Revenue Service (IRS) have filed 45 claims worth $44 billion against bankrupt cryptocurrency exchange FTX and its subsidiaries.
The claims were filed under “administrative priority,” enabling the IRS to supersede the claims of unsecured creditors during bankruptcy proceedings.
The IRS assessed $20.4 billion in partnership taxes and payroll taxes against FTX's sister company Alameda Research LLC. The agency also filed claims of $7.9 billion, $7.5 billion, and $2.0 billion against Alameda Research Holdings.
While Alameda Research was headquartered in Hong Kong, its founders and key personnel, including Sam Bankman-Fried and Caroline Ellison, are U.S. nationals. As such, they are liable for taxes on their worldwide income irrespective of their place of residence or how much time they spend in the U.S. each year.
In a previous coverage from CryptoDaily, a new proposal for the IRS' tax framework for crypto losses was forwarded, further complicating the situation for FTX. The framework would make it more difficult for investors to deduct their crypto losses, which could discourage investment in the crypto industry.
The framework is also complex and could be difficult for taxpayers to comply with. This could lead to increased tax audits and penaklties for taxpayers who make mistakes. Thus far, the IRS's proposed framework for crypto losses is a negative development for the crypto industry. The framework could make it more difficult for investors to invest in crypto and could lead to increased tax audits and penalties.
The IRS's claims against FTX and its subsidiaries could also have a chilling effect on the crypto industry, with investors and businesses becoming less likely to participate in the crypto industry if they are concerned about being audited by the IRS, discouraging newer players.
A fairer and more equitable tax framework for crypto losses must be adopted if crypto regulation and laws in the US aim to support growth in the sector. Such a framework should allow investors to deduct their crypto losses, regardless of whether they are held as an investment or a business. This would encourage investment in the crypto industry and help to grow the burgeoning industry.
The IRS's claims are a major setback for FTX, which is already facing significant liabilities from its bankruptcy filing. The exchange's liabilities still outweigh its assets by an estimated $8.7 billion. The IRS's claims is poised to make FTX' recovery from bankruptcy even more difficult.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.