Bankrupt crypto exchange FTX has taken a hard stance against a hefty $1.53 billion claim from the beleaguered hedge fund Three Arrows Capital (3AC), asserting in recent court filings that the troubled fund is owed absolutely nothing. According to FTX, it was 3AC’s “own risky trading strategy” that led to its downfall, not any actions on FTX’s part, as they scramble to untangle a complex web of claims and counterclaims in the labyrinthine world of crypto finance.
FTX Fires Back: The Courtroom Drama Unfolds
In a whirlwind of legal filings, FTX’s attorneys are vigorously contesting the claim, arguing that 3AC’s financial woes were self-inflicted. They allege that 3AC had speculated heavily on a bullish turn in cryptocurrency prices using capital they didn’t possess—an audacious bet that went spectacularly wrong when the market nosedived. In a desperate bid to cover their positions, 3AC allegedly liquidated its high-risk bets and pulled assets from FTX. This follows a pattern of risky behaviors in the crypto industry, as seen in our coverage of Gotbit’s founder being sentenced for crypto wash trading.
FTX’s lawyers are adamant that the hedge fund’s losses were due to these misjudgments rather than any missteps by the exchange itself. “The Joint Liquidators grossly inflate the actual $284 million value of assets associated with the 3AC Accounts on June 12, 2022, by more than $1.2 billion,” FTX’s legal team stated. They argue that all losses resulted from market price declines and 3AC’s own withdrawals.
The Numbers Game: Analyzing the Claims
The figures at the heart of this legal battle are staggering. In June 2022, FTX claims that 3AC’s assets were worth only $284 million, broken down into $1.017 billion in digital assets and negative $733 million in US dollars. These numbers are a far cry from the colossal $1.53 billion 3AC is demanding.
FTX maintains that the only liquidation of 3AC assets they executed—on June 14, 2022—converted $82 million in crypto to cash, which they argue actually benefited 3AC, rather than harming it. Meanwhile, 3AC’s legal representatives assert that FTX liquidated a massive $1.53 billion of their assets just two weeks before the hedge fund itself entered liquidation. The court, siding with 3AC earlier this year, found FTX’s claims of a loan to be inadequately documented.
A Tumultuous History: The Broader Crypto Collapse
The backdrop to this courtroom clash is a turbulent period in crypto history. 3AC’s implosion in June 2022 was part of a cascade of collapses following the Terra/LUNA debacle, which sent shockwaves through the sector, toppling giants like Voyager, Celsius, BlockFi, and Genesis in its wake. FTX, once a titan of the exchange world, filed for bankruptcy in November 2022, shortly after its own dramatic collapse. This period of instability has prompted regulatory scrutiny, as highlighted in our report on South Korea’s investigation into local crypto exchange fees.
Since then, FTX’s recovery trust has been working diligently to distribute $5 billion to its creditors, a process that began in earnest in May. Meanwhile, 3AC has experienced its own share of turmoil, with liquidators digging deep to unearth potential recoveries—leading to the fierce legal dispute now unfolding.
The Road Ahead: What Lies in Store?
As the legal saga continues, 3AC has a deadline of July 11 to file an objection, with a hearing set for August 12. The outcome remains uncertain, with both parties entrenched in their positions. Analysts are watching closely, noting the potential implications for the broader crypto industry and its regulatory landscape.
The case raises questions about accountability and risk management in the volatile world of digital assets. Can the industry learn from these high-profile failures? What changes might regulators enforce to prevent similar debacles? As the drama between FTX and 3AC unfolds, the answers—or lack thereof—could shape the future of crypto finance.
Source
This article is based on: Bankrupt Crypto Exchange FTX Slams Three Arrows Capital’s $1.53B Claim: “3AC Is Owed Nothing”
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Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
