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FTX Creditors Challenge $24 Billion IRS Tax Claim Says Claim Could Bankrupt Victims, Not FTX

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FTX Creditors Challenge  Billion IRS Tax Claim Says Claim Could Bankrupt Victims, Not FTX
  • FTX creditors challenge a $24 billion IRS tax claim, saying no other funds exist beyond victim compensation.
  • Filing disputes the IRS’s demand as having no legal basis.
  • Creditors propose an estimation schedule for similar claims to speed the bankruptcy case, citing court precedent.

In a recent court filing, FTX’s creditors disputed the U.S. government’s claim for $24 billion in unpaid taxes from the bankrupt crypto exchange FTX. The creditors argue that there are no other sources of cash apart from taking money away from victims of fraud. The filing disputes the amount claimed by the Internal Revenue Service (IRS) and says that the IRS’s demand has no legal basis.

The case is scheduled to be heard later this week. The U.S. government’s proposal for determining the amount owed by FTX to the IRS would unduly delay the administration of the case, according to FTX’s creditors. The filing argues that unless the IRS’s demand is rejected, victims of fraud will not receive any meaningful recovery.

Does it Really Leaves Victims Empty-Handed?

FTX’s creditors are worried about the IRS’s huge $24 billion tax claim. They say if the IRS gets this money, it will come from the pockets of people who lost money in the FTX crash. This means victims won’t get back much, if anything, of what they lost. The creditors say the IRS’s claim doesn’t have a legal basis and that there should be a faster way to figure out how much tax FTX really owes. They are urging the court to reject the IRS’s claim so that victims can get some of their money back.

The filing disputes the amount claimed by the IRS and says that there is simply no basis to support the IRS’s meritless claims that the debtors owe tax in an amount that is orders of magnitude greater than any income the debtors ever earned and that would effectively prevent most of FTX’s creditors, themselves victims of fraud, from obtaining any meaningful recovery.

Creditors Urge for Swift Tax Estimation

FTX creditors warn that the government’s current approach to calculating taxes owed delays justice for victims. They propose a quicker estimation process, similar to those used in past cases, to expedite compensation without jeopardizing the bankruptcy plan. This would ensure victims receive their rightful share while preventing further financial burden and frustration. The immense amount of documentation already submitted by FTX, they argue, renders additional assessments unnecessary and delays unacceptable.

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