FTX Settles Massive Tax Claim with IRS for $885 Million

Credit: Clout News


FTX Settles Massive Tax Claim with IRS for $885 Million

Author's avatar Shaheer Ansari

Time icon June 4, 2024   | Last Updated: June 7, 2024 at 1:04 AM

Bankrupt cryptocurrency exchange FTX has reached a settlement agreement with the Internal Revenue Service (IRS) to resolve a previously disputed $24 billion tax claim. The agreement, filed with the Bankruptcy Court for the District of Delaware, outlines a payout of $885 million from FTX to the IRS.

The settlement breaks down into two parts. FTX will pay $200 million as a priority claim within 60 days of a court-approved creditor repayment plan. The remaining $685 million will be classified as a lower-priority claim, paid out when funds are available after satisfying customer claims.

FTX initially challenged the IRS’s $24 billion claim, arguing that the amount was excessive and would significantly impact individual creditor reimbursements. Negotiations between the two parties resulted in a significantly reduced settlement amount, paving the way for a more favorable outcome for creditors.

This settlement marks another step forward in resolving outstanding claims following FTX’s Chapter 11 bankruptcy filing in 2022. The company collapsed under the leadership of its founder, Sam Bankman-Fried, who now faces criminal charges.

With nearly $16 billion allocated for debtor distribution, estimates suggest creditors could receive up to 118% of their holdings, a rare outcome in bankruptcy cases. However, some concerns have been raised regarding potential high administrative and restructuring fees impacting the final payout amount.

The FTX bankruptcy proceedings continue as the company works to finalize a court-approved creditor repayment plan. The final payout percentage for creditors will depend on the court’s decision and the available funds after administrative costs are covered.

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Shaheer Ansari

Shaheer is a Journalist and Managing Editor at Clout News. His reporting is a medley of finance, crypto, influencers, and entertainment stories.