FTX has agreed to pay the Internal Revenue Service (IRS) $885 million to settle a $24 billion tax claim levied during its bankruptcy proceedings. According to a filing with the Bankruptcy Court for the District of Delaware, FTX will pay the IRS $200 million in priority claims, due within 60 days of an implemented court-approved creditor repayment plan.

FTX attorneys acknowledged the potential for significant tax obligations but challenged the IRS’s $24 billion case. The troubled crypto company argued that a multi-billion tax payment could severely impact individual creditor reimbursements.

In addition to the $200 million priority payment, the IRS is owed $685 million, classified as “lower priority.” The estate can pay this amount when funds are available after satisfying customer payments.

The IRS settlement is another step toward full creditor payments following FTX’s bankruptcy filing in 2022. FTX sought Chapter 11 protection after the once-prominent crypto exchange collapsed under the leadership of its convicted founder Sam Bankman-Fried.

Nearly two years later, following Anthropic share liquidations, discounted Solana (SOL) auctions, and multiple crypto recovery missions, the firm announced almost $16 billion for debtor distribution.

Since the company owes creditors around $12 billion, it could repay most customers up to 118% of their holdings, a rare outcome for any bankruptcy case.

Meanwhile, some speculate that the biggest winners are administrators and restructuring personnel under bankruptcy veteran and CEO John J. Ray. The embattled firm has approved $500 million in fees to law firms like Sullivan and Cromwell, Paul Hastings, and Quinn Emanuel.

For more updates on FTX and other cryptocurrency news, stay tuned to Global Crypto News.

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