In November 2022, the FTX exchange hit rock bottom due to crimes committed by Sam Bankman-Fried, plunging the cryptocurrency world into a seemingly inescapable pit. Subsequently, the market fully bottomed out and struggled to recover for a long time. Over time, the market recovered, SBF headed to prison, and FTX sought solutions in various areas. A recent report by Bloomberg highlighted this development.
A Major Victory for FTX
FTX achieved a significant gain during the process where the Internal Revenue Service demanded $24 billion. According to the report, an agreement was reached between the two entities on a much lower amount than what the agency claimed FTX owed. This resolution paved the way for customer recovery payments to be made by the crypto exchange.
The IRS will receive a $200 million payment within the first 60 days of the company’s proposed restructuring process. According to the filing made in the U.S. Bankruptcy Court for the District of Delaware on Monday, the agency will also receive a lower-priority claim of $685 million, “payable secondarily to customers and other creditors” and “to the extent funds are available.”
The agreement removed a significant obstacle in the bankruptcy process of the FTX exchange. As a result, the long-standing and unpredictable lawsuit between the bankrupt crypto exchange and its largest known creditor will come to an end.
FTX had previously indicated that if the IRS’s claim were approved, it could potentially hinder payments to customers.
Statement from FTX
In a statement on Monday, FTX highlighted that the agreement “eliminated the uncertainties regarding the amount claimed by the IRS” and allowed the Chapter 11 Cases to be resolved quickly. Consequently, it was announced that the debtor company could make distributions to its other creditors and customers as quickly as possible.
FTX stated that customers would be fully repaid. FTX had contested the $24 billion payment demand. Nevertheless, it was noted that there “could be a significant tax liability to the IRS,” and the agency’s claims could bring additional complications.
