FTX Estate Confronts Potential 3 Dollars to 5 Billion Dollars in Claims from US Government During Bankruptcy Proceedings

Crypto News– According to a court filing on Wednesday, U.S. government claims against the bankrupt crypto exchange FTX are projected to range from $3 to $5 billion, subject to potential adjustments and negotiations with relevant authorities.

FTX Estate Confronts Potential 3 Dollars to 5 Billion Dollars in Claims from US Government During Bankruptcy Proceedings

The filing from the United States District Court for the Southern District of New York highlighted the uncertainty surrounding the total amount of U.S. tax claims. However, once all government and tax obligations are settled, any remaining proceeds will be allocated for distributions to shareholders.

It’s crucial to understand that under Chapter 11 priorities, FTX customers, Alameda Research lenders, administrative expenses, and non-governmental creditor claims will be addressed before any government and tax claims.

The proposal suggests that funds or assets returned to the FTX estate by the U.S. Attorney’s Office for the Southern District of New York or other governmental entities (referred to as “SDNY Remission Proceeds”) will primarily be used for distributions to FTX.com customers and Alameda lenders, including a settlement with BlockFi.

After covering administrative expenses and non-governmental creditor claims, up to 25% of the distributable value will be allocated to settle U.S. Federal income tax claims, with the remainder allocated for claims by the Commodity Futures Trading Commission and other government entities.

Furthermore, governmental claims will be placed in a Civil Remission Fund, which will be utilized to compensate FTX customers and creditors whose crypto holdings appreciated between the petition date and a date just before the Chapter 11 Disclosure Statement issued by the Bankruptcy Court, estimated for later this year.