FTX Appeals IRS’s $24 Billion Tax Demand; KuCoin Agrees to Cease From Operating in New York and Pay $22 Million to Settle; BlackRock Enhances Spot Bitcoin ETF for Seamless Bank Access
FTX Appeals IRS’s $24 Billion Tax Demand
The ongoing dispute between the IRS and FTX, the government agency tasked with enforcing tax laws in the US, has reached a new dimension. FTX’s legal team rejected the IRS’s $24 billion tax claim.
FTX vehemently opposed the IRS’s claim and stated in its petition to the Delaware bankruptcy court that they did not earn any profits or pay dividends during the short operating period. FTX’s lawyers argued that the $24 billion claim was excessive, saying that the exchange was already losing money and was far from capturing the alleged tax base.
FTX Objects to IRS’s $ 24 Billion Tax Demand
The IRS first presented the tax it demanded from FTX as $ 44 billion. It then revised this figure in September, reducing it to $ 43 billion and finally settled on $ 24 billion. However, FTX characterises this amount as lacking a solid basis.
FTX’s Defence
The IRS refuses to insist on this latest demand. FTX, on the other hand, considers the IRS’s position as an “Alice in Wonderland argument”.
FTX, together with accounting firm EY, reported that it responded in detail to the IRS’s requests. FTX’s legal team announced that FTX responded to 2300 information requests from the tax office and submitted all requested documents, except for a few documents scheduled to be transferred in January 2024.
KuCoin agrees to cease from operating in New York and pay $22 million to settle
KuCoin reached an agreement with New York regulators on the condition that it pay a $22 million fine and terminate its operations in New York. However, KuCoin’s decision to terminate its services in New York will undoubtedly affect its market dominance.
If we come to KuCoin’s payment details; will pay a penalty of $ 5.3 million to the state. In addition, by returning $ 16.7 million worth of crypto money to 177,800 investors in New York, it will have paid a total of $ 22 million.
The agreement was made at a time of tightening regulatory controls in the US and includes KuCoin’s commitment to stop trading securities and commodities in New York. KuCoin is seen as one of the global giants among cryptocurrency exchanges. Regulatory pressures and the fact that users in New York no longer have access to the exchange may leave the company in a difficult situation in the US market.
The lawsuit against Seychelles-based KuCoin was filed by Attorney General Letitia James in March 2023. The Attorney General sued the exchange, accusing it of selling commodities and securities in the state without regulatory authorisation.
New York increases scrutiny on cryptocurrencies
The Hong Kong-based CoinEx exchange, which Letitia James sued for similar reasons, reached a $ 2023 million settlement in June 1.8. CoinEx was sued by James on the grounds that it was not registered in NY state and was operating illegally.
Attorney General Letitia James sued cryptocurrency exchange Gemini, Genesis Global and its parent company Digital Currency Group (DCG) simultaneously in October 2023, accusing them of defrauding investors of over $ 1 billion. Digital Currency Group dismissed the lawsuit on the grounds that it had no basis and no basis.
In addition, the New York Department of Financial Services recently tightened the rules for cryptocurrency listings, focusing on cryptocurrencies targeting retail customers.
BlackRock Enhances Spot Bitcoin ETF for Seamless Bank Access
BlackRock has made significant amendments to its spot Bitcoin exchange-traded fund (ETF) application, aimed at facilitating easier participation for major Wall Street banks. The revised approach enables banking giants such as JPMorgan and Goldman Sachs to act as authorized participants (APs) by creating new fund shares with cash, instead of solely with cryptocurrency.
This innovative “prepay” model, introduced during a Nov. 28 meeting with the United States Securities Exchange Commission (SEC) by six BlackRock members and three from NASDAQ, could be a pivotal development for trillion-dollar balance sheet banks. These institutions, bound by stringent regulations, often face limitations on holding Bitcoin directly on their balance sheets.
In the revamped structure, APs transfer cash to a broker-dealer, which then converts the funds into Bitcoin. The cryptocurrency is subsequently stored by the ETF’s custody provider, with Coinbase Custody fulfilling this role for BlackRock. The redesigned model not only facilitates the involvement of major banks but also mitigates risk by placing it more in the hands of market makers.
BlackRock emphasizes that the new model enhances resistance to market manipulation, a key concern cited by the SEC in rejecting previous spot Bitcoin ETF applications. The financial giant contends that the revised ETF structure will bolster investor protections, reduce transaction costs, and streamline operations across the broader Bitcoin ETF ecosystem.
BlackRock recently held its third meeting with the SEC on Dec. 11, led by Gary Gensler. This follows a Nov. 28 meeting, which served as a follow-up to the initial presentation of the in-kind redemption model on Nov. 20. The SEC is expected to make a decision on BlackRock’s application by Jan. 15, with the final deadline set for March 15.
Analysts specializing in ETFs anticipate the SEC to deliver decisions on multiple pending spot Bitcoin ETF applications between Jan. 5-10. Noteworthy financial firms, including Grayscale, Bitwise, VanEck, WisdomTree, Invesco Galaxy, Fidelity, and Hashdex, are among those eagerly awaiting the SEC’s verdict during this timeframe.