FTX settles $24 billion IRS claim for fraction to prioritize customer repayments


Defunct
crypto
exchange

FTX
has
agreed
to
settle
the
Internal
Revenue
Service
(IRS)
substantial
$24
billion
tax
claim
for
a
significantly
lower
amount
to
help
the
company
prioritize
its
customer
repayments
during
its

ongoing
bankruptcy
process.

According
to
the
terms
of
the
settlement,
the
IRS
will
receive
a
$200
million
priority
claim
to
be
paid
within
60
days
after
FTX’s
proposed
restructuring
plan
is
implemented.

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Additionally,
the
IRS
will
receive
a
$685
million
lower-priority
claim.
This
secondary
claim
will
be
paid
on
a
subordinated
basis
only
after
customers
and
other
creditors
have
been
satisfied
and
only
if
funds
are
available.

The
details
were
outlined
in
a
June
3
filing
with
the
US
Bankruptcy
Court
for
the
District
of
Delaware.

The
settlement
is
a
crucial
step
in
resolving
FTX’s

bankruptcy
issues,
removing
a
significant
potential
obstacle.
Without
this
agreement,
a
protracted
legal
battle
with
the
IRS
could
have
jeopardized
the
repayment
plan
for
FTX’s
customers.

The
company
previously
contended
that
an
upheld
$24
billion
IRS
claim
would
severely
impact
customer
repayments.

In
the
court
filing,
FTX
emphasized
that
the
settlement
provides
clarity
and
facilitates
a
quicker
resolution
of
the
bankruptcy
case,
enabling
a
prompt
distribution
of
funds
to
creditors
and
customers.

The
company
said:

“This
settlement
provides
much-needed
certainty
regarding
the
magnitude
of
the
IRS
claims
and
allows
these
Chapter
11
cases
to
move
swiftly
toward
resolution.”

FTX
has
expressed
its
commitment
to
fully
repaying
its
customers
despite
acknowledging
potential
significant
tax
liabilities
to
the
IRS.
The
company
disputed
the
IRS’
$24
billion
claim
but
recognized
that
the
agency’s
demands
presented
complex
legal
challenges.zz

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Author: Assad Jafri


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