Judge Expands 3AC’s Claim Against FTX to $1.53 Billion

A US judge has granted a motion to significantly expand the claim of the defunct crypto hedge fund Three Arrows Capital (3AC) against the bankrupt crypto exchange FTX. The judge's decision increases 3AC’s claim against FTX from $120 million to a substantial $1.53 billion. This expansion is based on new court filings that reveal FTX liquidated $1.53 billion worth of 3AC’s assets on the platform just two weeks before 3AC itself went under.

The court documents indicate that FTX, under the leadership of its former chief executive, liquidated nearly all of 3AC’s $1.53 billion in assets between June 12th and June 14th, 2022. This liquidation was purportedly to eliminate a $1.3 billion negative USD balance that 3AC had with FTX. The liquidators' analysis shows that 3AC had a significant liability on the FTX platform, which was addressed by liquidating its assets.

The collapse of the Terra (LUNA) ecosystem in 2022 had a devastating impact on 3AC, leading to its inability to meet margin calls and resulting in its eventual failure. Around the same time, 3AC faced a notice of default on a $665 million debt owed to the crypto hedge fund Voyager Digital. The Terra collapse also contributed to the bankruptcy of FTX, with its former chief executive later found guilty of defrauding investors and mishandling billions of dollars worth of customer funds. He was sentenced to decades in prison in 2023.

This development underscores the complex web of financial entanglements and the severe consequences that can arise from the collapse of major players in the crypto industry. The expansion of 3AC’s claim against FTX highlights the ongoing legal and financial repercussions of the events that unfolded in 2022, as various parties seek to recover losses and hold accountable those responsible for the industry's turmoil. The judge's decision to expand 3AC’s claim against FTX is a significant development in the ongoing legal battles surrounding the collapse of these major crypto entities. It reflects the intricate nature of the financial relationships within the crypto industry and the far-reaching impact of the failures of key players. As the legal process continues, it will be crucial to monitor how these developments shape the future of the crypto landscape and the efforts to restore confidence in the industry.