FTX Rejects 3ACs $1.53 Billion Claim Over Crypto Losses

Lawyers representing the collapsed crypto exchange FTX have formally rejected a $1.53 billion recovery claim submitted by the liquidators of Three Arrows Capital (3AC). The dispute centers around the alleged losses incurred by 3AC due to risky trading strategies, which FTX lawyers argue should not be compensated by creditors.

3AC initially filed a $120 million claim in FTX’s bankruptcy case in June 2023, which was later expanded to $1.53 billion in November 2024. The claim includes allegations of breach of contract, fiduciary duty, and unjust enrichment. 3AC contends that FTX held $1.53 billion in its assets, which were liquidated to settle liabilities in 2022, contributing to 3AC’s collapse. The hedge fund argues that these transactions were avoidable and that FTX’s debtors delayed providing information that would have uncovered the liquidations. Chief Judge John Dorsey granted 3AC’s motion in March, siding with their argument.

In response, FTX filed an objection in the U.S. Bankruptcy Court for the District of Delaware, asserting that 3AC’s claims are illogical and baseless. FTX’s lawyers argued that 3AC’s strategy of betting on increasing crypto prices backfired when prices dropped, leading to the hedge fund’s downfall. They also disputed the accuracy of 3AC’s account balance and the methodology used to arrive at the $1.53 billion figure. FTX maintains that 3AC’s crypto balance on June 12, 2022, was $1.02 billion, not $1.59 billion, and the negative U.S. dollar amount was $733 million, not $1.3 billion.

FTX’s lawyers further argued that the theory of lost assets, which forms the basis of 3AC’s argument, is flawed and lacks legal or factual merit. They contend that 3AC is owed nothing and that the only liquidation against 3AC was for $82 million in crypto, which was contractually permitted to ensure compliance with account balance requirements. FTX also revealed that the liquidation did not reduce the overall account balance because the value was added to 3AC’s fiat account in USD, benefiting the hedge fund by preserving the value of its accounts.

3AC has until July 11 to file a reply to FTX’s objection. A non-evidentiary hearing is scheduled for August 12 before Chief Judge Karen Owens in the U.S. Bankruptcy Court for the District of Delaware. This legal battle highlights the complex web of financial claims and counterclaims arising from the collapse of major crypto entities, underscoring the need for transparency and accountability in the industry.