FTX Creditors And Injured Parties Get Bad News, New Ruling To Save Them?
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December 14, 2023 2:13 pm
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The IRS has once again reared its ugly head and has now complicated the recovery process for injured parties of the FTX collapse.
Creditors and former clients of the now-bankrupt platform have been seeking to be made whole through the bankruptcy recovery process.
Stewards and custodians overseeing the bankruptcy process have already reportedly recovered $7 billion in assets.
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Now, the IRS is claiming that FTX owes the government agency $24 billion in back taxes; that is roughly 3x the amount owed to FTX creditors and former customers.
A judge has come to the aid of the victims of FTX by issuing a ruling seeking to expedite the recovery process for the victims so they can get what they are owed before the IRS comes to collect.
Here’s more on the story:
US tax officials must justify a $24 billion tax bill that threatens to wipe out recoveries for victims of the fraud-tainted crypto firm FTX under a ruling made by a bankruptcy judge. https://t.co/iZ3F5845vT
— Bloomberg Tax (@tax) December 13, 2023
FTX says IRS demand for $24 billion in unpaid taxes is delaying recovery of user funds, per the Block.
— unusual_whales (@unusual_whales) December 11, 2023
According to The Block:
During its short three-year life, FTX never distributed dividends or earnings and “never earned anything anywhere near amounts that could support the IRS claims for $24 billion in taxes,” the lawyers wrote.
On the contrary, FTX lost a vast amount of money, they added.
JUST IN🚨
FTX says IRS demand for $24 billion in unpaid taxes is delaying the recovery of user funds.
That’s 3x the amount #FTX needs to make creditors whole.
— Muhammad Crypto (@mocryptoreal) December 11, 2023
official call out for full repatriation of any fund out of FTX towards IRS (and guess assets/ FTX investments might go on auction soon to accelerate the recovery).
@TheBlock__ : FTX says IRS demand for $24 billion in unpaid taxes is delaying recovery of user funds https://t.co/D40KC1z6dR— Denis Rusinovich (@DenisRusinovich) December 11, 2023
Cryptopolitan had more on the recent ruling:
The judge emphasized the importance of avoiding unnecessary delays that could further complicate an already intricate case.
Judge Dorsey also offered a cautious perspective to the IRS concerning its expectations regarding the potential recovery amount.
Despite the customary precedence of the IRS in receiving payouts in corporate bankruptcy cases, the judge warned that the actual tax debt owed by FTX might not align with the IRS’s estimated $24 billion claim.
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