The U.S. Internal Revenue Service (IRS) is reportedly seeking a staggering $44 billion from the bankruptcy of cryptocurrency exchange FTX and related firms, including a hefty $38 billion claim against its sister quantitative trading firm Alameda Research. The eye-watering sum has raised questions about the potential impact on creditors, as the IRS claims could take precedence over the interests of unsecured creditors during bankruptcy proceedings.
Alameda Research was founded in 2017 by Sam Bankman-Fried and Tara Mac Aulay, with Caroline Ellison as CEO. Based in Hong Kong where taxes on capital gains are not levied, the U.S. nationals still have an obligation to pay taxes on their worldwide income under U.S. taxation by citizenship rules. This detail is likely to be scrutinized closely moving forward.
The taxation assessments by the IRS indicate the belief that Alameda operated as a partnership. This is a critical distinction as it means profits are not taxed at the corporate level, but are instead “passed through” to partners and subsequently taxed at an individual level. If the IRS emerges victorious, the consequences could be dire for partnering creditors.
While efforts from law firms and bankruptcy trustees have located $7.3 billion in assets from FTX and associated companies, the $44 billion figure looms large over the proceedings. To complicate matters further, the recent frenzy surrounding the Milady (LADYS) token could impact the proceedings, with its value skyrocketing by 3,254% in a single day. The meme token’s market cap has now passed $100 million, with $245 million traded in the past 24 hours.
The legal saga is not only confined to the U.S., as Terraform Labs co-founder Do Kwon faces multiple criminal proceedings across jurisdictions. Currently behind bars in Montenegro, Kwon faces extradition to both South Korea and the U.S. on fraud charges.
Simultaneously, Singaporean hedge fund Three Arrows Capital (3AC) co-founder Su Zhu has secured a restraining order prohibiting BitMEX co-founder Arthur Hayes from using “threatening, abusive or insulting words or behavior” that would cause “harassment, alarm or distress.” As a creditor with a reported personal claim of $6 million, Hayes has been vocal in his criticism of Zhu and his business dealings.
These interconnected legal proceedings, the massive sum being sought by the IRS, and the uncertainty surrounding the LADYS token phenomenon could all contribute to a complex, high-stakes affair with potentially far-reaching consequences for multiple parties involved.
Source: Cointelegraph
