FTX Settles $24 Billion IRS Claim for $885 Million

IRS will receive up to $885 million from the bankrupt FTX, a significant reduction from the initial $24 billion claim, according to a settlement agreement between the parties.

The amount includes a priority payment of $200 million, which the exchange must pay within 60 days after the proposed restructuring plan takes effect.

The remaining $685 million will be paid to the IRS after FTX completes compensations to clients and creditors, provided there are sufficient funds.

The bankruptcy court must approve the settlement agreement.

While disputing the $24 billion claim, exchange representatives acknowledged the potential for substantial tax liabilities. However, they noted that fulfilling these obligations could significantly impact individual investors’ reimbursements.

In May, FTX proposed a new compensation plan, under which 98% of creditors would receive at least 118% of their claims. The company forecasts total compensation to range from $14.5 billion to $16.3 billion.

Representatives of the largest creditor group opposed the exchange’s proposal, arguing that the plan limits recipients’ options and absolves some accused parties of responsibility.

Earlier reports revealed that the approved payments to consultants and lawyers involved in FTX’s bankruptcy exceeded $500 million.

Back in March, the exchange’s founder, Sam Bankman-Fried, was sentenced to 25 years in prison. His lawyers have appealed the decision.