According to a recent report According to Bloomberg Law, the bankrupt crypto exchange formerly run by Sam Bankman-Fried, FTX, has reached a settlement with the Internal Revenue Service (IRS) over a $24 billion claim.
The settlement allows FTX to pay a fraction of the amount claimed by the IRS, paving the way for the exchange to distribute large recoveries to customers.
$885 million settlement from FTX
Under the terms of the settlement, the company will pay the IRS $200 million within 60 days of implementing the proposed restructuring plan.
In addition, the IRS will receive a lower priority claim of $685 million, which will be paid on a subordinated basis to customers and other creditors, depending on the availability of funds. These details were outlined in a filing by FTX in the U.S. Bankruptcy Court for the District of Delaware.
This settlement constitutes a significant development in the exchange’s bankruptcy proceedings, as it resolves a potential source of protracted and uncertain litigation between the crypto exchange and its the largest creditor.
FTX previously argued that if a judge had upheld the IRS request, it could have hindered the payment of customer funds.
The settlement provides much-needed clarity on the scale of the IRS’s claims and paves the way for rapid resolution of Chapter 11 bankruptcy cases. As noted in Monday’s filing, this will allow FTX to quickly distribute funds to its other creditors and clients.
Customers will receive 98% of claims in cash
As reported per Bitcoinist, FTX assured its customers that it would refund them in full. In a May 7 press release, FTX announced that it would reimburse 98% of its customers up to a minimum of 118% of permitted claims in cash.
The insolvent crypto exchange had filed a new reorganization strategy in the United States Bankruptcy Court in Delaware.
The crypto exchange also revealed that it obtained between $14.5 billion and $16.3 billion after sell assets and properties property of the company.
This specifically includes assets under the control of the “Chapter 11 Debtors,” the joint official liquidators of FTX Digital Markets Ltd. and FTX Australia, as well as various private parties participating in the recovery and reimbursement process.
Final approval of the settlement will be subject to approval by a bankruptcy judge and successful implementation of FTX’s broader framework. restructuring plan. Once these conditions are met, the regulation will take effect.
This resolution between FTX and the IRS marks an important step forward in the exchange’s bankruptcy proceedings. With the settlement in place, FTX can focus on its restructuring efforts and work to satisfy its obligations to customers and creditors.
At the time of writing, the native token of the FTT exchange is trading at $1.60, following the general upward trend of the market, which has seen a 3% increase in the last 24 hours alone.
Featured image from Shutterstock, chart from TradingView.com
