FTX to Pay $200 Million to IRS in 60 Days as Part of Settlement
Bankrupt cryptocurrency exchange FTX has reached a settlement agreement with the US Internal Revenue Service (IRS) that will see the company pay nearly $1 billion to the government.
The proposed settlement amount is $885 million, significantly lower than the initial $24 billion demanded by the IRS.
Payment Details and Creditor Priorities
As per the proposed plan, FTX debtors have agreed to pay $200 million to the IRS within 60 days of the agreement’s confirmation. The remaining $685 million will be paid “to the extent of available funds as per the agreement.” This means the claim is considered of lesser priority, and other claims will be paid first.
Court Proceedings and Reactions
An hearing regarding this motion is scheduled for June 25th in front of Judge John Dorsey, who oversees the bankruptcy proceedings. In December last year, FTX debtors contested the $24 billion claim made by the tax agency, stating that FTX, while in operation, “never generated amounts remotely capable of justifying a $24 billion tax demand from the IRS.”
It’s worth noting that the IRS originally alleged that FTX owed nearly $44 billion in taxes, a sum that was later halved by the agency itself. The proposed settlement eliminates another obstacle in FTX’s path to close its bankruptcy proceedings. Later this month, a hearing will take place to discuss the proposed reorganization plan by the estate.
In early May, the estate announced that it had raised between $14.5 billion and $16 billion to repay creditors. However, the plan has received mixed reviews from critics. Some creditors are unhappy that their claims will be paid at “crypto prices of November 2022,” an aspect of the plan that was contested earlier this year, although Judge Dorsey declared that the code was “very clear.”
