US IRS has reduced the amount of claims against FTX from $24 billion to $885 million

A part of the amount will be paid to the agency after the debts owed to customers are settled

05.06.2024 - 12:05

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3 min

What’s new? The bankrupt crypto exchange FTX has settled the claims of the US Internal Revenue Service (IRS) for $24 billion, significantly reducing the amount of claims. Under the agreement, the IRS will receive a $200 million payment in priority, and another $685 million will be reimbursed after the exchange’s customers and creditors receive their funds.

Material by Bloomberg

What else is known? The settlement agreement removes a significant obstacle in FTX’s path to bankruptcy, resolving a potential protracted litigation. If the IRS lawsuit had been granted by the court, payments to FTX’s regular customers would have been significantly delayed, its managers argued.

According to the managers, the agreement eliminates uncertainty about the amount of the IRS claim and expedites the distribution of funds to creditors in the bankruptcy case.

It is specified that the settlement agreement must also be approved by the court and will take effect after the broader restructuring plan takes effect.

Late last year, FTX managers challenged the IRS demand, saying that officials were essentially trying to take money away from the exchange’s customers who were victims of a fraudulent scheme by its creators.

Former FTX senior executive Ryan Salame received 7,5 years in prison in the US

The term exceeded the sentence recommended by prosecutors

Then the managers urged the tax authorities to disclose the method of calculations, as a result of which the unpaid taxes were estimated at $24 billion. At the same time, they recognized that the exchange could have significant tax liabilities.

In May, FTX presented a new bankruptcy plan, under which creditors will receive 118% of the claims, while the value of cryptocurrencies will be assessed at the rates at the time of the collapse of the exchange in November 2022. Since then, bitcoin has risen by more than 350% and the total capitalization of the crypto market by more than 230%.

In response, Sunil Kavuri, a representative of FTX’s largest creditor group, called for a vote against such an unfavorable compensation plan.

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