FTX Settles $24 Billion IRS Tax Claim with $885 Million Payment

By paying $885 million, FTX has reached a substantial settlement with the Internal Revenue Service (IRS) on a $24 billion tax claim. During FTX’s continuing bankruptcy procedures, this deal came to light.

The intention to pay $200 million in priority claims to the IRS was disclosed by FTX in a recent file with the Bankruptcy Court for the District of Delaware. This sum is owed 60 days after a creditor reorganization plan that has been approved by the court. The possibility for significant tax obligations was acknowledged by FTX’s lawyers, but they refuted the IRS’s $24 billion assertion. They contended that the repayment of individual creditors may be significantly impacted by such a large tax payment.

Beyond the $200 million priority payment, the IRS is also owed $685 million, categorized as “lower priority.” This amount will be paid when the estate has sufficient funds available after satisfying customer payments.

Steps Toward Creditor Payments

This IRS settlement is a critical milestone in FTX’s journey toward full creditor payments. The firm filed for Chapter 11 bankruptcy protection in 2022 after collapsing under the leadership of its founder, Sam Bankman-Fried. Nearly two years later, FTX has managed to accumulate almost $16 billion for distribution to its debtors. This has been achieved through various measures, including liquidating Anthropic shares, holding discounted Solana (SOL) auctions, and executing multiple crypto recovery missions.

FTX is on track to return most clients up to 118% of their holdings, which is an extraordinary result for a bankruptcy case, despite owing creditors almost $12 billion. This possible complete payback represents the significant efforts made by the current management of the company and is an uncommon event.