US Tax Department Claims $44 Billion from Bankrupt FTX

US Tax Department Claims $44 Billion from Bankrupt FTX

The US Department of Treasury and Internal Revenue Service (IRS) have filed 45 claims, totalling about $44 million, against bankrupt crypto exchange FTX and other affiliates.

US Tax Claims against FTX

The bankruptcy filings on April 27 and 28 show that the US tax agency’s claims against several FTX companies, which includes Bahamas-registered FTX Trading Ltd.; Alameda Research; West Realm Shires, which operated the US affiliate of FTX; Ledger Holdings, which is the parent of LedgerX and LedgerPrime; Blockfolio; and a few others. FTX recently sold LedgerX for $50 million.

The initial bankruptcy filings of FTX estimated its assets to be between $1 billion and $10 billion. However, the FTX bankruptcy attorneys have already recovered $7.3 billion in assets, meaning the bankrupt empire’s liabilities are much higher than its assets.

The largest claims of the US Tax Department are against Alameda Research LLC, with two individual claims of $20.4 billion and $7.9 billion, and another two claims against Alameda Research Holdings Inc., totaling $9.5 billion.

The claim of $20.4 billion is against the company’s partnership and payroll taxes due. These claims are labelled 'administrative priority,’ meaning they can supersede the claims of other unsecured creditors during the bankruptcy process.

The Complicated US Tax Regime

FTX primarily operated from outside the United States. Alameda Research, founded by Sam Bankman-Fried, was headquartered in Hong Kong. However, Bankman-Fried and its key executives, including Caroline Ellison, the CEO, are US nationals, and the US, unlike most countries, imposes uses a taxation-by-citizenship regime, making US nationals liable for their incomes worldwide despite their tax residency.

For partnership entities, US taxes are passed through partners and taxed at individual levels, which is the case for Alameda Research.

„Federal law prevents the IRS from confirming or denying any correspondence with regard to any taxpayer case,” an IRS spokesperson said in a media statement.

FTX, Alameda Research, and over 134 other affiliates filed for bankruptcy in the US last November after Bankman-Fried’s shady business practices surfaced. Bankman-Fried, facing an array of criminal and civil charges, recently put forward a motion to drop the criminal allegations ahead of the trial pending on October 2, while top executives of his FTX-Alameda empire pled guilty to their charges.

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This article was written by Arnab Shome at www.financemagnates.com.

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