IRS wants $38 billion tax from Alameda
According to recent filings by the claims agent of bankrupt cryptocurrency exchange FTX, the United States Internal Revenue Service is claiming a total of $44 billion from the exchange’s bankruptcy and related firms, including $38 billion against its sister quantitative trading firm, Alameda Research. In one single claim, the IRS assessed $20.4 billion in unpaid partnership and payroll taxes against Alameda Research LLC.
Founded in September 2017 by Sam Bankman-Fried and Tara Mac Aulay and led by Caroline Ellison, Alameda was headquartered in Hong Kong and conducted up to $5 billion worth of trades per day at its peak. Hong Kong does not levy taxes on capital gains. However, being U.S. nationals, its founders and key executives are obligated to pay taxes on their worldwide income irrespective of where they reside and how many days they actually spend in the U.S. each year, under the highly unusual U.S. taxation by citizenship regime.
The partnership taxes assessed by the IRS suggests it believes the entity operated on a partnership basis, where, unlike corporations, profits are not taxed at the entity level but are instead “passed through” to its partners and subsequently taxed at the individual level.
If the IRS prevails, it could mean bad news for the creditors. According to the filing, the IRS is claiming a total unpaid taxes of $44 billion from FTX and related companies. The IRS claims would take precedence over those of unsecured creditors, such as FTX’s one million users, during bankruptcy proceedings. Despite their best efforts, bankruptcy trustees and law firms have only managed to locate $7.3 billion in assets from FTX and related entities.
Milady NFTs and token frenzy
On May 8, seeing the traction surrounding meme tokens, a group of self-organized developers created the Milady (LADYS) token on Ethereum, basing their design on the popular anime nonfungible tokens collection of the same name. The token has no association with Milady Mixer nor Charlotte Fang, the creators of the Milady collection.
Developers stated that “94% of the tokens were sent to the liquidity pool (LP). LP tokens were burned, and the contract is renounced.” Another 1% was airdropped to Milady NFT holders, with the remaining 5% reserved in multisig wallets for future milestones. In addition, developers warned:
“$LADYS is a meme coin with no intrinsic value or expectation of financial return. There is no formal team or roadmap. The coin is completely useless and for entertainment purposes only.”
However, it appears that investors thought otherwise. At the time of publication, each LADYS token is worth $0.0000001285 apiece, an increase of 3,254% in one day’s time. On May 10, American business magnate Elon Musk tweeted a meme containing the image of a Milady NFT, causing the collection’s average sale price to spike.
On May 11, Asia-Pacific-focused exchanges such as Gate.io Bybit, Bitget, MEXC Global, and Huobi all began listing the meme token. At the time of publication, LADYS’ market cap has surpassed $100 million, with $245 million in volume traded within the past 24 hours.
Do Kwon’s prospects: Bad to worse
Last May, Terraform Labs co-founder Do Kwon was a bourgeoning South-Korean billionaire at the helm of the $40 billion Terra Luna and TerraUSD dual-token ecosystem. One year later, Kwon is behind bars in the Baltic nation of Montenegro, awaiting trial on charges of falsifying documents. Luna, his life’s work, now sits in ruins, while Kwon faces extradition on fraud charges from both South Korean and U.S. prosecutors related to the collapse of Terra/Luna, on top of his Montenegrin legal woes.
Kwon’s actions have truly upset a lot of people. The disgraced South Korean entrepreneur faced yet another setback on May 10, when South Korea Chief Judge Yun Chan-Young froze 233.3 billion Korean won ($176 million) worth of Kwon’s personal assets.
The prohibition extends to the sale of Do Kwon’s luxury apartment in Seoul, a new mixed-useproperty in Nonhyeon-dong and a series of imported cars. The order also bans the disposition of Kwon’s financial assets, such as securities, bank deposits and cryptocurrency stored in personal accounts on digital currency exchanges. Multiple criminal proceedings across jurisdictions against Kwon are currently ongoing.
Meanwhile, his attorneys have proposed releasing Kwon on bail at 400,000 euros ($437,000), which the court is yet to decide on.
3AC co-founder scores victory
Once upon a time, a wise Chinese sage said something to the effect of, “If you can’t solve a problem, then the least you can do is to solve the person who raised it.”
On May 5, Singaporean judge Sandra Looi Ai Lin of the Protection from Harassment Court issued a restraining order against BitMEX co-founder Arthur Hayes. The judgment came at the request of attorneys representing co-founder Su Zhu of Three Arrows Capital (3AC), a Singaporean hedge fund undergoing bankruptcy proceedings with total claims of $3.5 billion. Among other items, the restraining order prohibits Hayes, under the penalty of fines and or imprisonment by Singaporean authorities, from:
“By any means, using any threatening, abusive or insulting words or behaviour, or making any threatening, abusive or insulting communication, that would cause the Applicant [Su Zhu] harassment, alarm or distress.”
Hayes is one of 3AC’s many creditors, with an alleged personal claim of $6 million. But unlike his colleagues, who prefer to stick with official British Virgin Island bankruptcy court communications in reclaiming funds (to mixed results), Hayes regularly calls out the 3AC co-founders’ behavior on Twitter. In one instance, he wrote, “be warned. I want my fucking money,” in response to a purported Bahrain sovereign wealth fundraise by Zhu and his colleague Kyle Davies.
Despite their financial woes, it appears that Zhu and Davies have largely bounced back from the unpleasant experience. Nowadays, Davies frequently boasts of his culinary skills on social media, while Zhu shares his take on world philosophy as it ties into 3AC’s downfall.
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