FTX Settles IRS Tax Claim: $24 Billion For Customers To Be Reimbursed

Key Points:

• FTX settles $24 billion tax claim with IRS.
• IRS to receive $685 million as lower priority claims.
• Settlement pending judge’s approval and FTX’s restructuring.

FTX settles IRS tax claim by agreeing to pay $200 million within 60 days and $685 million as lower priority claims. This enables swift case resolution and customer reimbursement.

The failed cryptocurrency exchange FTX has settled with the Internal Revenue Service (IRS) on a $24 billion tax claim. FTX is to pay a small part of the claimed amount in order to allow the company to compensate its customers significantly.

FTX Settles IRS Tax Claim for $24 Billion

The terms of the settlement stated that within 60 days of the date of the company’s proposed reorganization plan, FTX will pay the IRS $200 million as priority claims in the bankruptcy case.

Further, the IRS will receive $685 million as lower priority claims. The payments of the said lower priority claims will be paid to the customers and other creditors on a secondary basis when sufficient funds are available.

The Impact of the Settlement on FTX’s Customers and Creditors

The settlement has removed a significant roadblock in FTX’s bankruptcy case, removing the long and uncertain litigation risk between the crypto exchange and its largest creditor, the IRS. If a judge had ruled in favor of the IRS claim, it could have caused customers to face serious payment problems.

FTX commented on the settlement in a filing on Monday, saying it “provides much needed certainty as to the magnitude of the IRS Claims and allows these Chapter 11 Cases to move swiftly toward resolution, thereby enabling the prompt distribution to the Debtors’ other creditors and customers.”

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FTX’s Plan for Reimbursement and Future Restructuring

The firm has also acknowledged that the $24 billion claim is wrong, but they did admit to having a huge IRS tax liability, and that the legal claims of the said agency showed novel legal questions.

The settlement is, however, still subject to the bankruptcy judge’s approval and will come into force once FTX’s broader restructuring plan is carried out. FTX has further stated that the company will reimburse its customers in full.