Key Takeaways:
- FTX has reached a preliminary settlement with the IRS, agreeing to pay $200 million in priority tax payments and $685 million as a subordinated claim, pending court approval.
- The agreement, covering tax claims up to October 31, 2022, aims to reduce litigation risks and provide certainty for creditor and customer recovery.
- FTX proposes a plan to fully reimburse all claims, with creditors having claims below $50,000 eligible for a 118% recovery.
FTX, the bankrupt cryptocurrency exchange, has reached a preliminary settlement with the IRS, its largest creditor, regarding a tax dispute initially valued at $24 billion.
The IRS had originally claimed FTX owed over $44 billion in taxes, but this was later reduced.
The IRS demanded $24 BILLION from FTX..
— borovik (@3orovik) June 4, 2024
They ended up settling for $200 million…
If a regular person is targeted by IRS, I don’t think they’ll let you pay 120 TIMES less money to settle pic.twitter.com/3tNlvSlWX2
The settlement, pending court approval of FTX’s reorganization plan, involves FTX paying $200 million in priority tax payments within 60 days and $685 million as a subordinated claim, to be paid after compensating customers and other creditors.
The agreement covers tax claims up to October 31, 2022.
FTX argues that it should not be taxed on funds misappropriated by its former CEO, Sam Bankman-Fried, and disputes the IRS’s calculations for employment taxes.
Additionally, FTX claims legitimate deductions and losses that the IRS is improperly disallowing.
This settlement aims to reduce litigation risks and provide more certainty regarding recovery for creditors and customers.
FTX has proposed a plan to fully reimburse all claims, with creditors having claims below $50,000 eligible for a 118% recovery, affecting 98% of FTX’s creditors by number.
IRS TAKES FIRST DIBS IN FTX PAYOUT BUT AT FRACTION OF TOTAL AMOUNT OWED
— BSCN (@BSCNews) June 4, 2024
– IRS will receive a $200 million priority claim in FTX bankruptcy, before any other customers or creditor who are owed funds and will need to be paid within 60 days of when the company’s proposed… https://t.co/fpdNTdkX2W pic.twitter.com/m2Vy4kB3I5
Repayments will be based on asset values at the time of FTX’s collapse in November 2022.
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