FTX has a plan, but creditors are not impressed: Law Decoded
FTX has outlined its intended reorganization plan, which will categorize claimants of the bankrupt exchange into specific classes and pave the way for it to become operational as an offshore entity. However, a body representing FTX customers said it is “extremely disappointed” by the plan.
FTX’s Official Committee of Unsecured Creditors (UCC) said despite its repeated requests and previous promises from the team, it “did not have a single call or meeting” with FTX to discuss the plan. The UCC warned it would put forward its own plan for FTX customers to vote on if it continued to be ignored.
Meanwhile, the company has filed a motion in court to remove its Dubai unit from ongoing restructuring proceedings in the United States. In the filing, the crypto exchange noted that FTX Dubai is balance sheet solvent and, therefore, a voluntary “liquidation procedure in accordance with the laws of the United Arab Emirates would allow a timely distribution of the positive cash balance after payment of all outstanding liabilities and liquidation of all assets.“
IRS deems crypto staking reward taxable once received
U.S. crypto investors must report crypto staking rewards as gross income in the year it was received, according to a new ruling from the country’s top tax authority. Gross income includes income realized in any form, whether in money, property, services or staking rewards. The ruling applies to cash-method taxpayers who receive any crypto as remuneration for validating transactions on proof-of-stake blockchains and applies both when staking cryptocurrency directly and through a centralized crypto exchange.
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U.S. Senators believe there are $50 billion of non-collected taxes on crypto
Senators Elizabeth Warren, Bernie Sanders, Bob Casey and Richard Blumenthal claim there is a “$50 billion crypto tax gap,” and that the Internal Revenue Service and U.S. Treasury risk missing out on roughly $1.5 billion in tax revenue for the 2024 financial year if a tax policy update is delayed. The senators are referring to new tax laws outlined in the Senate’s $1.2 trillion infrastructure bill passed in August 2021. The bill aimed to increase the tax reporting requirements for businesses acting as crypto brokers.
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DOJ is concerned about a run on Binance in the case of fraud charges
The U.S. Department of Justice (DOJ) is reportedly considering charging cryptocurrency exchange Binance with fraud but is hesitating due to the potential costs to consumers. DOJ officials are concerned about an indictment against Binance causing a run on the exchange similar to what happened with FTX in November 2022. Officials are reportedly considering fines or non-prosecution agreements for Binance rather than criminal charges in an effort to reduce the harm to consumers.
Binance was already reportedly the target of a criminal probe in the U.S. for allegedly violating the country’s sanctions on Russia. The U.S. Securities and Exchange Commission also filed a lawsuit against the crypto exchange in June for allegedly offering unregistered securities and operating illegally. In March, the Commodity Futures Trading Commission targeted the exchange and its CEO, Changpeng “CZ” Zhao, for allegedly violating trading and derivatives regulations.
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