Court Grants 3AC Liquidators $1.53 Billion Claim Against FTX Amid Bankruptcy Battle

• A court allowed 3AC liquidators to raise their FTX claim from $120 million to $1.53 billion after record delays.
• FTX creditors objected to the claim but the court ruled they had enough notice that 3AC could seek more funds.
• 3AC liquidators say FTX unfairly seized $1.33 billion in assets which reduced recovery options for creditors.

A U.S. bankruptcy court has allowed the liquidators of Three Arrows Capital (3AC) to expand their claim against FTX from $120 million to $1.53 billion. Judge John Dorsey ruled that the claim was reasonable, rejecting FTX’s objections. The decision recognized delays caused by FTX in providing necessary records, which hindered the liquidators’ ability to finalize their claim earlier.

FTX creditors, led by CEO John Ray III, argued that the claim amendment was untimely and an attempt to slow bankruptcy proceedings. They stated that the original claim did not indicate the final amount 3AC would pursue. The court decided that FTX obtained enough early warning from the initial filing for which it needed to prepare against potential higher claims.

3AC operated as a major crypto hedge fund that handled more than $3 billion in assets before the firm collapsed in 2022. The company faced bankruptcy following losses resulting from failed TerraUSD stablecoin transactions and extreme leveraged investments. Following its collapse, creditors pursued asset recovery from multiple trading platforms, including FTX, which also declared bankruptcy in the same year.

The liquidators of 3AC claim that FTX seized $1.33 billion in hedge fund assets just two days before 3AC defaulted. They argue that these transactions were unnecessary and reduced recovery opportunities for creditors. The amended claim includes allegations of breach of contract, unjust enrichment, and breach of fiduciary duty.

According to the court, FTX failed to provide requested financial records, forcing 3AC liquidators to analyze raw data to determine their losses. They also allege that FTX undervalued the seized assets, making the liquidation process unfair. In response, FTX claims that an unidentified 3AC-linked individual initiated the asset liquidation.

FTX has also been involved in multiple lawsuits. The company filed lawsuits against Binance and CEO Changpeng Zhao to obtain a total of $1.76 billion in crypto assets. FTX filed a $100 million lawsuit against SkyBridge Capital together with its founder Anthony Scaramucci regarding alleged wrong use of investments executed by former FTX CEO Sam Bankman-Fried. Another lawsuit seeks $80 million from Waves founder Aleksandr Ivanov for transactions involving Alameda Research.

The liquidators of 3AC have also taken legal action against Terraform Labs, demanding $1.3 billion in compensation. They argue that the TerraUSD and Luna tokens contributed to 3AC’s downfall by misleading investors about their stability.

Tags:3AC binance Changpeng Zhao Crypto market cryptocurrency FTX Skybridge Terra Classic