A fierce legal battle has erupted between two bankrupt crypto giants – exchange FTX and hedge fund Three Arrows Capital (3AC). FTX is firmly pushing back against 3AC’s $1.5 billion claim, arguing that the fund's losses stemmed from its own reckless strategies.

🔹 FTX: 3AC’s Claim Is Baseless

In a detailed 94-page objection filed on June 20 in U.S. Bankruptcy Court in Delaware, lawyers representing the FTX Recovery Trust urged the judge to fully dismiss 3AC’s claim, calling it “unfounded” and “illogical.”

According to FTX, 3AC’s actual balance on the platform at the time of bankruptcy was only $284 million—not the nearly $1.6 billion the hedge fund claims. The exchange states this is because 3AC owed $733 million in margin debt, which was subtracted from the balance.

FTX argues that 3AC is now trying to offload the consequences of its high-risk bets onto other creditors. “FTX creditors should not be the guarantors of Three Arrows Capital’s failed trades,” the filing reads.

🔹 Billions Vanished in Just Two Days

Most of 3AC’s funds allegedly “evaporated” in just two days in June 2022 during a major crypto market crash. About $222 million was lost due to market movements, and an additional $60 million was withdrawn by 3AC itself.

FTX claims it only liquidated $82 million – fully permitted under its terms of service – in order to prevent the account from going into a negative balance.

🔹 3AC’s Claim Has Ballooned

Notably, 3AC originally filed a $120 million claim in 2023. That amount was increased to $1.53 billion in November 2024. The fund’s liquidators argue that FTX failed to meet its obligations and delayed disclosure of key information regarding the liquidations.

While Judge John Dorsey has ruled in 3AC’s favor on some discovery-related matters, the overall claim remains under review.

🔹 FTX: Liquidation Was Contractual, Not Seizure

FTX insists that there was no “seizure” of assets, but rather a contractual conversion of volatile crypto holdings into U.S. dollars—a move they say preserved 3AC’s value rather than destroyed it.

FTX also disputes the accuracy of 3AC’s figures, accusing the fund of inflating its balances. According to the objection, 3AC’s real crypto balance at its peak was $1.02 billion, not $1.59 billion, and it owed $733 million—not $1.3 billion.

🔹 Ruling Expected in August

If the court sides with FTX, 3AC’s claim could be completely rejected or downgraded to an unsecured claim—resulting in only a fraction of the requested amount being recovered.

3AC’s official response is due by July 11, and the court hearing is scheduled for August 12.



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