In recent financial news, the United States Internal Revenue Service (IRS) has initiated a colossal $44 billion tax claim against the bankrupt cryptocurrency exchange FTX and its associated companies. The claim, revealed in the latest filings, notably includes a hefty $38 billion demand against Alameda Research, a quantitative trading firm closely linked to FTX.
According to Cointelegraph’s news, The IRS has assessed unpaid partnership and payroll taxes of $20.4 billion specifically against Alameda Research LLC. It is important to note that Hong Kong, where Alameda was headquartered, does not impose taxes on capital gains. However, as U.S. nationals, the founders and key executives of Alameda are required to pay taxes on their global income regardless of their residence or time spent in the U.S. due to the unique U.S. taxation system based on citizenship.
The IRS’s assessment of partnership taxes implies that it views Alameda Research as operating on a partnership basis, where profits are not taxed at the entity level but are passed through to partners and taxed at the individual level. If the IRS is successful in its claims, it could have negative implications for the creditors involved. The IRS’s unpaid tax claims of $44 billion would take priority over those of unsecured creditors, including FTX’s one million users, during the bankruptcy process. Despite efforts by bankruptcy trustees and law firms, only $7.3 billion in assets from FTX and related entities have been located thus far.
In this recent financial shockwave, the IRS has come down hard on FTX and Alameda Research, demanding a significant sum of $44 billion in unpaid taxes. This massive claim notably targets Alameda Research with a $38 billion bill, potentially changing the financial landscape of cryptocurrency trading. This claim could set a precedent, demonstrating the IRS’s willingness to hold crypto entities to account, even those operating in jurisdictions traditionally known for their lax taxation rules.
However, the most pressing concern is the potential fallout for the unsecured creditors, including FTX’s one million users. The IRS’s claims taking precedence could lead to considerable losses for these creditors in the ongoing bankruptcy process. Despite extensive efforts by trustees and law firms, only $7.3 billion in assets have been discovered so far, a far cry from the total claims made by the IRS.