FTX Rejects 3ACs $1.53 Billion Claim Over Risky Trading

FTX has firmly rejected a $1.53 billion claim filed by Three Arrows Capital (3AC), asserting that the claim is not only exaggerated but also rooted in flawed assumptions and poor risk management practices by 3AC itself. In a recent legal filing, FTX's legal team argued that 3AC's claim is "unreasonable" and represents an unfounded attempt to offset its own failed risk management strategies. The dispute centers around 3AC's allegation that FTX improperly liquidated its assets, leading to significant financial losses. However, FTX contends that the losses were a direct result of 3AC's risky trading and leveraged strategies, which ultimately backfired.

According to FTX’s legal team, 3AC borrowed heavily to bet on rising crypto prices, despite lacking the necessary capital. When the market turned, those leveraged positions unraveled quickly. “3AC bet big that cryptocurrency prices would increase using cash it did not have,” FTX’s attorneys stated. “When prices instead plummeted, 3AC liquidated its risky bets and pulled funds from FTX.” The filing claims that any decline in account value was due to 3AC’s own aggressive trades—not FTX’s platform or policies.

The exchange insists it holds no responsibility for the losses Three Arrows incurred during the crypto market crash in June 2022. FTX's lawyers have emphasized that creditors should not be held accountable for the consequences of 3AC's high-risk bets. They pointed out that 3AC's claim is based on inflated balances and risky trades, which were the primary causes of the massive losses. The legal battle is set to continue, with a hearing scheduled for August 12, where both parties will present their arguments and evidence.

The dispute now sits at the center of one of crypto’s most high-profile bankruptcies. 3AC, which collapsed in mid-2022, is seeking to recover over $1.5 billion in assets it claims were lost while using FTX. FTX, itself undergoing bankruptcy proceedings, maintains that the claim is unjustified and should be dismissed. The case could set precedent for how courts handle risk and accountability when multiple collapsed firms try to recoup losses from one another.

The rejection of 3AC's claim by FTX highlights the broader issues within the cryptocurrency industry, where risky trading practices and poor risk management can lead to substantial financial losses. This dispute serves as a reminder of the importance of prudent financial management and the potential consequences of engaging in high-risk investments. As the legal proceedings unfold, it will be crucial for both parties to provide clear and compelling evidence to support their positions. The outcome of this case could have significant implications for the cryptocurrency industry, setting a precedent for how similar disputes are handled in the future.