Bankrupt cryptocurrency exchange FTX has reached a settlement with the IRS to resolve a $24 billion tax dispute.
If approved by a judge, FTX will pay $200 million within 60 days and $685 million as a subordinated claim to be paid after other creditors are compensated.
This settlement reduces litigation risk and increases certainty for creditors and customers. FTX CEO John J. Ray III emphasized that the settlement is a crucial step in resolving the bankruptcy and aims to return over 90% of assets to customers by mid-2024.
FTX disputes the tax amount demanded, arguing against taxes on funds misappropriated by former CEO Sam Bankman-Fried and contesting the IRS’s calculations for employment taxes. Despite these disputes, the IRS intended to pursue significant tax liability without a settlement.
FTX, once a leading crypto platform, filed for Chapter 11 bankruptcy in November 2022 due to a liquidity crisis.
The collapse impacted many stakeholders and led to increased regulatory scrutiny. Former CEO Sam Bankman-Fried was found guilty of fraud, conspiracy, and money laundering.
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