⚡ FTX Averts $24 Billion Lawsuit
posted 5 Jun 2024
The defunct cryptocurrency exchange FTX has reached a settlement with the U.S. Internal Revenue Service (IRS), agreeing to pay a $200 million higher priority claim and a $685 million lower priority claim. This agreement stands in stark contrast to the initial claims totaling $24 billion. The payment is scheduled within 60 days after the restructuring plan goes into effect.
This settlement removes a significant legal obstacle in FTX's bankruptcy process, which previously clouded the ability to establish a clear asset distribution plan to clients and creditors due to potential unexpected costs. Company representatives had earlier highlighted the risk this lawsuit posed to all stakeholders.
The agreement will take effect immediately upon receiving approval from the bankruptcy court judge and the endorsement of the restructuring plan. FTX has declared its intention to fully repay all clients, although these claims have faced criticism and dissatisfaction from the cryptocurrency community due to the valuation of claims at the time of the bankruptcy.
Critics argue that clients should receive the full amount of their digital assets rather than their dollar equivalent as of November 2022, when the market prices had significantly dropped. Furthermore, a group of clients is calling for an investigation into Sullivan & Cromwell, the law firm overseeing the bankruptcy, for alleged fraud.
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