US tax department claims $44 billion from bankrupt FTX exchange

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The US Department of Treasury and the Internal Revenue Service (IRS) have made filings for 45 claims against FTX. These claims have totaled around $44 million. The claims have targeted the bankrupt FTX cryptocurrency exchange and other affiliates.

US tax department claims $44 billion from FTX

The claims by the US tax department are seen in the bankruptcy filings on April 27 and 28. The filings show that the US tax department made claims against several companies linked to FTX. Some affiliate companies include the Bahamas-registered FTX Trading Ltd, West Realm Shires, and Alameda Research.

One of the targeted companies, West Realm Shires, operated a US affiliate company for FTX, Ledger Holdings. Ledger Holdings is the parent company for LedgerX and LedgerPrime. FTX recently sold LedgerX for $50 million. The US tax department has also targeted Blockfolio.

The initial bankruptcy filings made by the FTX exchange estimated that the assets ranged between $1 billion and $10 billion. However, the FTX bankruptcy estate is already making significant recoveries, as it has already recovered $7.3 billion in assets. The development shows that the liabilities of FTX are significantly higher than the assets.

The largest claims made by the US tax department are against the FTX sister fund known as Alameda Research. The authority has made two individual claims of $20.4 billion and $87.9 billion against FTX. It has also made two other claims against Alameda Research Holdings, valued at $9.5 billion.

The initial claim of $20.4 billion against FTX targets the partnership at the company and the payroll taxes that are due to be paid. The claims have been labeled as “administrative priority,” meaning they are higher than any claims that other unsecured creditors have made during the bankruptcy filing.

Tax framework in the United States

Most operations handled by the FTX exchange were based outside the United States. Alameda Research is a hedge fund founded by Sam Bankman-Fried, and its headquarters were based in Hong Kong.

However, the FTX co-founder, Bankman-Fried, and Alameda’s CEO, Caroline Ellison, were US citizens. The US has a taxation-by-citizenship regime where US nationals are subject to make taxes for their incomes globally despite the tax residency where their businesses are based.

Regarding partnerships, US taxes are transferred through partners, and the tax is charged individually, which is what happened with Alameda Research. A spokesperson from the IRS said that federal law prevented the IRS from confirming or denying correspondence regarding anything to do with a taxpayer.

FTX and its sister company Alameda Research filed for bankruptcy in November last year. The bankruptcy filing was made after the exchange failed to meet customer withdrawals. Customers rushed to withdraw their funds from FTX after reports that Bankman-Fried engaged in malicious business practices.

Bankman-Fried is currently facing multiple criminal and civil charges. He recently forwarded a motion to drop the criminal charges against him ahead of his trial scheduled for October. Some top executives at FTX and Alameda have pled guilty to criminal charges and cooperating with prosecutors.

About Ali Raza PRO INVESTOR

Ali is a professional journalist with experience in Web3 journalism and marketing. Ali holds a Master's degree in Finance and enjoys writing about cryptocurrencies and fintech. Ali’s work has been published on a number of leading cryptocurrency publications including Capital.com, CryptoSlate, Securities.io, Invezz.com, Business2Community, BeinCrypto, and more.