Bankrupt cryptocurrency exchange FTX, formerly run by one-time crypto mogul Sam Bankman-Fried, has reached a settlement with the Internal Revenue Service (IRS) over a $24 billion claim.
According to Bloomberg Law, this agreement will allow FTX to pay a fraction of the IRS claim, facilitating the distribution of significant customer recoveries. Under the terms of the settlement, FTX will pay the IRS $200 million within 60 days of implementing its proposed restructuring plan.
Additionally, the IRS will receive a lower priority claim of $685 million, to be paid on a subordinated basis to customers and other creditors, depending on available funds. This information was detailed in a filing by FTX in the US Bankruptcy Court for the District of Delaware.
This settlement is a crucial development in FTX’s bankruptcy proceedings. It resolves a potential source of prolonged and uncertain litigation between the crypto exchange and its largest creditor.
Previously, FTX argued that if a judge upheld the IRS claim, it could have hindered the payment of customer funds. The recent settlement has provided the much-needed clarity regarding the size of the IRS claims and paves the way for a swift resolution of the Chapter 11 bankruptcy cases.
This will enable FTX to distribute funds to its other creditors and customers promptly.
Customers to receive 98% of claims
FTX has assured its customers that they will be repaid in full. According to a press release on 7 May, FTX announced it will pay back 98% of its customers at a minimum of 118% of the allowed claims in cash.
The insolvent crypto exchange has filed a new reorganisation strategy with the United States Bankruptcy Court of Delaware.
FTX revealed it has secured between $14.5 billion and $16.3 billion after selling assets and properties owned by the company. This 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 repayment process.
Final approval of the settlement is subject to the endorsement of a bankruptcy judge and the successful implementation of FTX’s broader restructuring plan. Once these conditions are met, the settlement will take effect.
This resolution marked an important step forward in the exchange’s bankruptcy proceedings. With the settlement in place, FTX can focus on restructuring efforts and work towards satisfying its obligations to customers and creditors.
Back in March, FTX had also struck a deal to sell the majority of its stake in artificial intelligence startup Anthropic for $884 million. According to a filing submitted to a Delaware court, this transaction included a consortium of buyers, with the largest stake going to ATIC Third International Investment Co., affiliated with Mubadala, a sovereign wealth fund in the United Arab Emirates. This group is purchasing nearly $500 million worth of Anthropic shares.
Multiple sovereign wealth funds reportedly competed for FTX’s Anthropic stake. As per reports, Saudi Arabia was specifically ruled out over national security concerns. The kingdom has been heavily investing in tech to diversify away from oil.
The second-biggest buyer in the Anthropic transaction is Jane Street, a quantitative trading firm where FTX founder Sam Bankman-Fried previously worked. The ex-CEO of FTX’s sister hedge fund Alameda Research, Caroline Ellison, also worked at Jane Street. The firm is purchasing shares worth almost $100 million.
At the time of writing, FTX’s native token $FTT is trading at $1.60, following a 3% market uptrend in the last 24 hours.
