Alameda’s $38B IRS bill, Do Kwon kicked in the assets, Milady frenzy: Asia Express

IRS wants $38 billion tax from Alameda

According to recent flings posted by the claims agent of bankrupt cryptocurrency exchange FTX, the U.S. Internal Revenue Service (IRS), 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 Sept. 2017 by Sam Bankman-Fried and Tara Mac Aulay, with Caroline Ellison serving as CEO, 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, as per the highly unusual U.S. taxation by citizenship regimen.

The partnership taxes assessed by the IRS suggests it believes the entity operated on a partnership regime, 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 the total unpaid taxes of $44 billion from FTX and related companies under Admin Priority. The IRS claims would take precedence over that 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.

A purported $20.4 billion IRS claim against Alameda Research circulating this week. (Twitter)

A purported $20.4 billion IRS claim against Alameda Research circulating this week. (Twitter)

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 (ETH), basing their design on the popular anime nonfungible tokens (NFT) collection of the same name. The token has no association with Milady Mixer nor Charlotte Fang, the creators of the Milady collection.

Read also

Features

What it’s like when the banks collapse: Iceland 2008 firsthand

Features

Blockchain is as revolutionary as electricity: Big Ideas with Jason Potts

Developers stated that “94% of the tokens were sent to the liquidity pool (LP). LP tokens were burnt, and the contract is renounced,” while the remaining 1% airdropped to Milady NFT holders and 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.

The price of Milady NFTs after Musk's shill. (OpenSea)

The price of Milady NFTs after Musk’s shill. (OpenSea)

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 the 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.

Read also

Features

‘Deflation’ is a dumb way to approach tokenomics… and other sacred cows

Features

Why are crypto fans obsessed with micronations and seasteading?

The prohibition extends to the sales of Do Kwon’s Galleria Foret apartment complex in Seoul, a novel officetel, 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 virtual currency exchanges. Multiple criminal proceedings across jurisdictions against Kwon are currently ongoing.

Meanwhile his attorneys have proposed he be let out on bail at 400,000 Euros or $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 attornies 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, of:

“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, writing in one instance, “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 his culinary skills on social media while Zhu shares his take on world philosophy as it ties into 3AC’s downfall.

Zhu Su's restraining order against BitMEX co-founder Arthur Hayes (Protection from Harassment Court of Singapore)

Zhu Su’s restraining order against BitMEX co-founder Arthur Hayes (Protection from Harassment Court of Singapore)

Zhiyuan Sun

Zhiyuan sun is a journalist at Cointelegraph focusing on technology-related news. He has several years of experience writing for major financial media outlets such as The Motley Fool, Nasdaq.com and Seeking Alpha.

Read also

Asia Express

Alameda’s $38B IRS bill, Do Kwon kicked in the assets, Milady frenzy: Asia Express

by Zhiyuan Sun 5 min May 11, 2023

Hodler’s Digest

SBF risks 115 years in jail, Binance’s FUD, and auditors quit crypto: Hodler’s Digest Dec. 11-17

by Editorial Staff 6 min December 17, 2022

Most popular

Features

‘Account abstraction’ supercharges Ethereum wallets: Dummies guide 

Features

Best and worst countries for crypto taxes – plus crypto tax tips

Features

$3.4B of Bitcoin in a popcorn tin: The Silk Road hacker’s story

Columns

Pro-XRP lawyer John Deaton ’10x more into BTC, 4x more into ETH’: Hall of Flame

Features

Here’s how Ethereum’s ZK-rollups can become interoperable

All Dutch and English crypto news!

Donald Trump vows to end Joe Biden’s ‘war on crypto’

United States Presidential candidate Donald Trump reiterated his intention to take a more favorable stance towards cryptocurrency compared to the current Biden administration.

Bitcoin whale watching is ‘useless’ for information — Traders

Bitcoin whale watching is “good for social media” but not for valuable analysis, according to traders.

Binance co-founder beseeches Elon Musk to address cryptocurrency scams on X

According to Yi He, “a significant amount of money” was lost when X.com users were tricked by an impersonation scam.

Musk promises ban on Apple, Greenpeace calls for Bitcoin’s PoS, and other news: Hodler’s Digest, June 9-15

Elon Musk threatens to ban Apple devices if they integrate with ChatGPT, Greenpeace calls for a shift in Bitcoin’s consensus mechanism, and more.

Beste exchanges

Koop je crypto bij Bitvavo