• The IRS launched an investigation into FTX's tax reporting malpractices
  • The tax agency filed the claims under 'administrative priority'
  • IRS claims against FTX highlight regulatory challenges faced by the crypto industry

The United States Internal Revenue Service (IRS) has filed several claims worth about $44 billion against the estate of bankrupt cryptocurrency exchange FTX and its affiliated entities.

The tax agency filed 45 claims against FTX subsidiaries, including its legal entity West Realm Shires, Ledger Holdings (the parent company of LedgerX and LedgerPrime) and Blockfolio, among other affiliates, as revealed by bankruptcy filings dated April 27 and 28, CoinDesk reported Wednesday.

The biggest ones included two claims worth $20.4 billion and $7.9 billion filed against FTX's sister company Alameda Research LLC, the tax details of which surfaced on social media Wednesday. Two other IRS claims were filed against Alameda Research Holdings Inc. worth a total of $9.5 billion. The IRS is claiming about $20 billion in partnership taxes from Alameda Research LLC, while the remaining amount includes millions in withheld income taxes and payroll taxes.

"Federal law prevents the IRS from confirming or denying any correspondence with regard to any taxpayer case," an IRS spokesperson told CoinDesk.

The claims come in the wake of an investigation launched by the IRS into FTX's tax reporting malpractices. As per the investigation, the exchange failed to report more than $20 billion in cryptocurrency transactions between 2019 and 2022.

The tax agency filed the claims under the classification "administrative priority," allowing its proceedings to supersede the claims of unsecured creditors during a hearing in a bankruptcy case, as per CoinTelegraph.

Alameda Research has its headquarters located in Hong Kong, while its founders and key personnel, including Sam Bankman-Fried and Caroline Ellison, are American nationals.

During a hearing in January, FTX's bankruptcy attorneys said they had located more than $5 billion in various assets. This came as the company, in its initial bankruptcy filings, estimated it had between $1-$10 billion in assets overall.

During a hearing in the United States Bankruptcy Court for the District of Delaware last month, lawyers representing FTX said the crypto firm recovered $7.3 billion in liquid assets. They added that the company may be considering rebooting the firm and crypto exchange operations in the second quarter of 2024 — suggesting a reboot as early as April. In January, new FTX CEO John Ray said he is looking into the possibility of reviving the bankrupt exchange as he works to return the funds to affected customers and creditors.

Founded in 2019, FTX emerged as one of the world's biggest cryptocurrency exchanges in a short period of time. It reported more than $1 trillion in trading volume in 2022 alone.

The IRS claims against FTX's tax irregularities bring attention to the regulatory challenges faced by the cryptocurrency industry at a time when federal authorities are looking to enforce tax laws to prevent money laundering and other illicit activities.

Illustration shows FTX logo