
The saga of crypto collapses continues, and this time it’s a heavyweight legal showdown. Defunct crypto exchange FTX is pushing back hard against a colossal $1.53 billion claim filed by the now-collapsed crypto hedge fund, Three Arrows Capital (3AC). This isn’t just a minor dispute; it’s a fight over billions in the ongoing crypto bankruptcy proceedings, with FTX asking the Delaware bankruptcy court to throw out the 3AC claim entirely.
Why is FTX Objecting to the 3AC Claim?
According to reports from The Block, FTX has formally filed its objection. Three Arrows Capital initially sought a much smaller $120 million but dramatically increased it to $1.53 billion in November 2024. 3AC claims this higher figure is based on new evidence related to asset liquidations carried out by FTX during its own downfall.
However, FTX‘s legal team presents a starkly different picture. They argue that any losses suffered by 3AC were not due to misconduct by FTX, but rather were a direct result of 3AC‘s own highly leveraged and risky trading strategies and, critically, its failure to meet margin requirements on the exchange.
Three Arrows Capital’s Margin Trouble and FTX’s Response
The core of FTX‘s argument centers on events that unfolded in June 2022, shortly after the collapse of the Terra (LUNA) ecosystem, which sent shockwaves through the crypto market. At that time, FTX claims that 3AC‘s account fell below the required $240 million margin threshold.
Instead of injecting the necessary funds to cover the margin call, FTX alleges that 3AC ignored outreach attempts and even withdrew $18 million in Ethereum (ETH). In response, FTX proceeded to liquidate 3AC‘s account. This action, according to FTX, was fully permitted under their trading agreement with 3AC and was necessary to mitigate further potential losses.
Who is to Blame in This Crypto Bankruptcy Clash?
FTX‘s objection paints Three Arrows Capital as attempting to deflect blame for its own implosion onto the FTX estate. They argue that allowing the massive $1.53 billion 3AC claim would be detrimental to the legitimate creditors who are seeking to recover funds from the collapsed exchange.
This legal battle is set to play out in the Delaware bankruptcy court. 3AC is required to submit its response to FTX‘s objection by July 11, 2025, with a court hearing scheduled for August 12, 2025. The outcome of this dispute could significantly impact the final recoveries for creditors in the complex FTX crypto bankruptcy case.
Summary: FTX Fights Back Against 3AC
In essence, FTX is telling the court that Three Arrows Capital‘s massive $1.53 billion claim is baseless. They contend that 3AC‘s losses stemmed from its own risky behavior and failure to meet margin calls, not from FTX‘s actions, which they maintain were legitimate liquidations. This high-stakes legal challenge highlights the complex and often contentious process of unwinding major failures in the crypto space, particularly in the context of crypto bankruptcy proceedings involving significant players like FTX and 3AC.
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