Deniz 
With its main creditor, the United States Internal Revenue Service (IRS), bankrupt crypto exchange FTX came to a preliminary arrangement.
A June 3 document claims that the IRS and the exchange decided to resolve a $24 billion tax dispute. Originally claiming FTX owed more than $44 billion in taxes, the IRS later cut the figure. The settlement relies on the court’s acceptance of FTX’s reorganization proposal.
Under the settlement, the IRS would agree to settle its $24-billion claim and get paid $200 million in priority taxes paid within 60 days of plan approval. As a subordinated claim paid after consumers and other creditors, the tax authorities will also gather $685 million.
Until October 31, 2022, the agreement covers any tax claims. FTX claims that the settlement lowers litigation risk and boosts confidence in creditor and customer recovery. “Considering some fresh and difficult tax law questions brought up by the IRS claims, the result of these proceedings would be unknown.”
Related: FTX Collapse: Ryan Salame Blames Sam Bankman-Fried
According to the petition, FTX argues with the amount and particular reasons for the tax liability while not refuting owing taxes. Specifically, the trade contends that Sam Bankman-Fried, the former CEO, should not be taxed on money stolen. It also runs counter to the IRS’s estimates of employment taxes connected to payments to Bankman-Fried and other CEOs.
Moreover, the trade contends that the absence of appropriate documentation causes the IRS to mistakenly disallow legitimate deductions and losses. The tax authority disagreed, though, and was ready to battle FTX in court for a sizable tax payment.
“The IRS has informed the debtors that, absent a settlement, it would pursue these and other theories to impose significant tax liability; it does not agree with their arguments.”
Aiming to fully compensate all claims plus some extra compensation, FTX announced a revised strategy to pay creditors on May 8. Only creditors with claims in an allowable sum less than $50,000 will be qualified for an 118% recovery, which FTX projected to represent “98% of the creditors of FTX by number.” Repayments will depend on asset value at the November 2022 collapse of FTX.