FTX has reached an agreement with the IRS to settle a $24 billion tax claim. As part of the ongoing bankruptcy process, FTX will pay the IRS $200 million as a priority tax claim within 60 days of court approval of its reorganization plan. Additionally, the IRS will receive an extra $685 million as a subordinated claim, to be paid after settling customer and other creditor claims.
Despite contesting the specific amount and basis for the tax liabilities, particularly those related to misappropriated funds by its former CEO, Sam Bankman-Fried, FTX has chosen to settle to ease the complexities of the bankruptcy proceedings and reduce litigation risks.
On May 8, FTX proposed a new repayment strategy to ensure creditors receive their dues, potentially including additional compensation. According to the proposal, creditors with validated claims below $50,000 will recover 118% of their losses, covering 98% of FTX’s creditors by count.
The outcome of the court’s review of the proposed settlement and reorganization plan could have broader implications for cryptocurrency regulation and bankruptcy law.
