FTX Settles $200M Tax Dispute with IRS as Roaring Kitty Faces Market Manipulation Accusations
Summary:
FTX, a bankrupt cryptocurrency exchange, has reached a $200 million tax settlement with the IRS. Elsewhere, GameStop short seller Roaring Kitty is facing market manipulation allegations. Bitcoin ETFs from BlackRock and Fidelity have significantly contributed to their firms' total ETF inflows this year.
The financially distressed cryptocurrency exchange FTX has agreed to a settlement with the U.S. Internal Revenue Service (IRS) to resolve a sizable tax bill. At the same time, Roaring Kitty, one of GameStop’s prominent short sellers, is facing allegations of market manipulation. Meanwhile, Bitcoin ETFs from BlackRock and Fidelity have constituted a large part of their total ETF inflows this year.
FTX, which has been dealing with bankruptcy, has settled its outstanding taxes with the IRS for $200 million. This agreement marks a significant step in smoothing out the bankruptcy process. According to paperwork filed on June 3, FTX and the IRS have decided to settle a $24 billion tax contention, awaiting the court's approval. The IRS initially claimed that FTX owed the government over $44 billion in taxes.
The proposed settlement would require the IRS to receive $200 million as a top-tier tax claim paid within 60 days following the approval. An additional $685 million would be collected as an inferior claim.
FTX, in the filing, does not dispute its tax liabilities but questions the total amount it has to pay. It argued that it should not face taxes on funds misused by its former CEO, Sam Bankman-Fried, who is serving a 25-year prison sentence. However, the IRS disagrees with FTX's argument and states that it would seek other angles to impose a substantial tax liability in the absence of a settlement.
In other news, Roaring Kitty's holding of GameStop (GME) stocks has been accused of market manipulation rather than traditional investment by Citron Research, a significant GameStop short seller. Citron Research disapproves of Gill's alleged market manipulation in a June 3 post. The firm accused Gill days after Gill reported that his GME position has risen over $300 million, which could make him the first GameStop billionaire by the week's end, assuming prices keep rising.
BlackRock and Fidelity's Bitcoin ETFs have also made headlines, contributing significantly to the companies’ total ETF inflows this year. Eric Balchunas, a Bloomberg ETF analyst, reports that the Bitcoin ETFs made up 26% and 56% of the companies' inflows over the past year for BlackRock and Fidelity, respectively.
BlackRock’s iShares Bitcoin Trust (IBIT) and the Fidelity Wise Origin Bitcoin Fund (FBTC) have seen inflows of $16.6 billion and $8.9 billion, respectively, since their launch about five months ago. Despite all this, Vanguard, which does not offer any Bitcoin ETFs, has attracted $102.8 billion in total ETF inflows in 2024, surpassing BlackRock's $65.1 billion.
Published At
6/4/2024 10:31:00 PM
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