Former FTX Head of Engineering Admits to Financial Crimes, Implicates Iconic Figurehead Sam Bankman-Fried

The ongoing face-off between FTX and the Internal Revenue Service (IRS) has hit a new high, with FTX’s legal team challenging the IRS’s $24 billion tax claim. Filed in a Delaware bankruptcy court, FTX staunchly rejects the IRS’s assertion, deeming it unfounded and excessively high.

Seems controversial, right? Dive right into all the details below!

Contentious Claims: No Leg to Stand On?

As per the latest update, FTX strongly disagrees with the IRS’s claim, pointing out that the exchange never made any money or paid any dividends during its brief operational span. The lawyers for FTX pushed back against the outrageous $24 billion claim, pointing out that the exchange had already lost money and couldn’t even come close to making the claimed taxable income.

The IRS should substantiate its claims against FTX and describe how it estimates the back taxes it owes, attorneys for FTX said in a new filing in Delaware Bankruptcy Court. Although FTX claims it owes nothing to the IRS, the tax agency is demanding as much as $24 billion, more…

— Wu Blockchain (@WuBlockchain) December 12, 2023

The IRS initially threw a staggering $44 billion into the ring, later revising it to $43 billion in September, and finally settling on the current $24 billion. FTX, however, remains skeptical, labeling the amount as absurd and lacking substantial backing.

Read More: A New Chapter for FTX Exchange: A Roadmap to Recovery in Mid-December

IRS’s Standpoint Vs FTX’s Defense

The IRS stands firm in its estimates, maintaining the right to demand the claimed amount while challenging FTX to disprove their calculations. In response, FTX called the IRS’s stance an “Alice in Wonderland argument,” casting doubt on the IRS’s presumed infallibility.

FTX, along with its accounting firm EY, has robustly defended itself, responding comprehensively to the IRS’s requests and supporting its position with copious evidence. The legal team disclosed that FTX has addressed a staggering 2,300 information requests from the tax department, furnishing all requested documents, with the exception of a few slated for transfer in January 2024.

And the Battle Continues...

As the legal drama unfolds, FTX seeks a methodical program to streamline creditor payments and avert further delays in compensating victims. The FTX bankruptcy saga is hurtling towards a pivotal moment, with a decisive meeting slated for December 13.

Having filed for bankruptcy in November amid a tumultuous period, FTX’s troubles deepened with the conviction of its former CEO, Sam Bankman-Fried, for duping users and investors. Against this chaotic backdrop, the clash with the IRS hints at a protracted legal battle on the horizon.

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Qadir AK

Qadir Ak is the founder of Coinpedia. He has over a decade of experience writing about technology and has been covering the blockchain and cryptocurrency space since 2010. He has also interviewed a few prominent experts within the cryptocurrency space.