FTX challenged the US IRS’s demand for a $24 billion payout

The exchange itself in December should present a plan of reorganization and return of funds to clients

12.12.2023 - 12:02

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What’s new? New managers of FTX through the court challenged the requirement of the US Internal Revenue Service (IRS) to pay $24 billion. In a statement, they write that officials are essentially trying to take money away from the exchange’s clients, who were victims of a fraudulent scheme by its creators. So far, managers have managed to regain control of FTX’s $7 billion in assets, $3,4 of which is represented in cryptocurrencies.

Bloomberg’s material

What else is known? FTX has called on the IRS to disclose the way it calculates unpaid tax charges to establish what portion of the claims are legitimate. The managers also argued that the exchange was only losing money over its three years of operation, and as such could not owe the IRS a meaningful amount. They emphasized that any amount the court would order the IRS to pay would reduce the bankruptcy estate and thus harm the exchange’s clients.

In turn, the IRS argues that it has not yet completed the audit of the exchange’s activities, and therefore the request for the court to assess the amount of the debt is inappropriate.

The original amount of IRS claims amounted to $44 billion. Officials filed claims against the exchange under the “Admin Priority” form, which allows it to get priority over creditors’ claims in bankruptcy. In September and November, it was reduced, first to $43 billion and then to the current $24 billion.

The managers reported that by mid-December they will present a plan for reorganization and return of funds to clients. Three scenarios are being considered: selling the entire exchange, including the client base of 9 million people, engaging a partner to relaunch, or restarting on their own.

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