FTX Rejects Three Arrows Capital’s $1.5B Claim, Blaming “Failed Trading Strategy”
Collapsed cryptocurrency exchange FTX has strongly opposed a $1.53 billion claim filed by the liquidators of Three Arrows Capital (3AC), arguing that the hedge fund’s losses were the result of high-risk leveraged trading and should not be borne by FTX’s creditors.
3AC’s Claim: Unjust Enrichment and Asset Liquidation
3AC’s liquidators initially filed a $120 million claim in June 2023 as part of FTX’s bankruptcy proceedings. By November 2024, that claim had ballooned to $1.53 billion, citing breach of contract, fiduciary duty, and unjust enrichment.
They alleged that FTX liquidated 3AC’s assets in 2022 to settle liabilities — a move they claim contributed significantly to 3AC’s downfall. The liquidators further argued that the transactions were avoidable and accused FTX of delaying the release of key data that could have exposed the liquidation earlier.
US Bankruptcy Judge John Dorsey granted a motion in March allowing 3AC to proceed with discovery.
FTX Response: “Illogical and Baseless”
In a court filing submitted on June 14, FTX’s legal team dismissed the claim as “illogical and baseless.”
“3AC made oversized bets on crypto prices continuing to rise. When prices collapsed, their strategy failed. Now, they want other FTX customers and creditors to cover those losses,” FTX argued.
FTX also challenged the basis for the $1.53 billion figure, asserting that 3AC miscalculated its account balance. According to FTX, 3AC’s actual crypto holdings on June 12, 2022, were valued at $1.02 billion, not $1.59 billion as claimed. The firm also disputes the stated USD shortfall, claiming it was $733 million, not $1.3 billion.
FTX: Only $82M in Liquidations Took Place
FTX insists that the only liquidation conducted was $82 million in crypto, and it was contractually permitted to meet margin requirements.
“This liquidation actually benefited 3AC,” the filing claims. “It allowed 3AC to exit deteriorating crypto positions in favor of stable fiat currency.”
Moreover, FTX alleges that the liquidation did not reduce the overall account balance because the proceeds were credited to 3AC’s USD account.
Additionally, FTX points out that 3AC voluntarily withdrew $60 million, further reducing its available balance, which at its peak was only $284 million.
Timeline and Next Steps
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3AC has until July 11 to file a response.
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A non-evidentiary hearing is scheduled for August 12 in the U.S. Bankruptcy Court for the District of Delaware, presided over by Judge Karen Owens.
Broader Legal Landscape
This dispute is part of a larger wave of recovery efforts by both bankrupt entities:
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3AC has also filed a $1.3 billion claim in Terraform Labs’ bankruptcy proceedings.
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FTX continues its aggressive strategy to recover assets through multiple lawsuits as it navigates its own bankruptcy, which began in November 2022.
This latest legal skirmish underscores the complex entanglements between once-dominant crypto firms and how their failures are now being litigated in bankruptcy courts — with billions of dollars and creditor recoveries hanging in the balance.
