FTX Pushes Back Against Massive 3AC Claim
Collapsed exchange FTX has formally objected to a $1.53 billion claim filed by Three Arrows Capital (3AC), arguing the claim is both “illogical and baseless.” According to court filings submitted to the U.S. Bankruptcy Court for the District of Delaware, FTX lawyers say the crypto hedge fund’s losses were self-inflicted, stemming from highly leveraged and speculative trading.
“3AC bet big on crypto’s rise — and lost. Now it wants others to pay for it,” FTX’s legal team stated.
Background: From $120M to $1.53B Claim
The dispute dates back to June 2023, when 3AC liquidators initially submitted a $120 million claim in the FTX bankruptcy proceedings. By November 2024, the claim ballooned to $1.53 billion, citing breach of contract, fiduciary duty, and unjust enrichment.
3AC alleges that FTX liquidated over $1.5 billion of its crypto assets in 2022, directly contributing to its own downfall. The firm also claims that FTX debtors delayed sharing key account information, which could have helped recover some of the assets earlier.
Chief Judge John Dorsey approved the expanded claim in March, allowing it to move forward in bankruptcy court.
FTX: Losses Were 3AC’s Responsibility
FTX’s legal team strongly disputes the size and nature of the claim. The objection outlines the following key points:
- 3AC’s June 2022 balance was allegedly $1.02 billion, not $1.59 billion.
- 3AC’s USD liabilities were $733 million, not the $1.3 billion claimed.
- Available assets were $284 million, with $60 million later withdrawn by 3AC.
- FTX only liquidated $82 million, and it was contractually allowed under margin and credit agreements.
“The claim asks this Court to force other Exchange customers to foot the bill for 3AC’s failed strategy,” FTX’s filing reads.
Dispute Over ‘Lost Asset’ Theory
FTX also criticized 3AC’s so-called “lost asset theory”, which assumes 3AC is entitled to recover the entire balance lost after June 12, 2022. FTX argues that this theory lacks legal merit, especially given the volatile market conditions and the hedge fund’s own actions leading to its collapse.
The exchange further alleges that 3AC overinflated its account values and that its losses were primarily due to market crashes, not wrongful liquidation.
Conclusion: Legal Showdown Looms
This case pits two of crypto’s highest-profile collapse stories against each other in a heated bankruptcy courtroom battle. As FTX fights to limit creditor payouts and maximize estate recovery, the challenge from 3AC’s liquidators will likely face intense scrutiny over trading practices, contract terms, and account accuracy.
With billions at stake, the outcome could set legal precedent for how failed crypto firms are treated in bankruptcy disputes moving forward.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.