FTX aims to impede 3AC's $1.5B claim, accusing self-imposed losses
Three Arrows Capital (3AC), once a crypto hedge fund, is dodging some serious heat over a disputed $1.6 billion claim against FTX. In a heated battle that'll make you feel like you're in the Deepweb, the FTX Recovery Trust is putting the pedal to the metal, demanding the judge to axe 3AC's claim entirely, calling it a wild goose chase.
The dispute boils down to how much crypto 3AC truly held on FTX during their both firms' demise in mid-2022. 3AC asserts its account balance was a whopping $1.6 billion, but FTX crunches the numbers differently, arriving at a more modest $284 million after subtracting $733 million in margin debt.
The legal docs, flipping through 94 pages, call out 3AC for ignoring its liabilities and expecting other creditors to bail 'em out after taking a ride on the risky crypto rollercoaster. FTX's bankruptcy estate draws a line: "Why should FTX creditors foot the bill for 3AC's failed trades?" they question.
Most of the $284 million vanished in a flash as crypto prices plummeted in June 2022. A significant chunk, $222 million, went travelling with the digital wind, while another $60 million was voluntarily withdrawn by 3AC itself. FTX, acting swiftly, only liquidated $82 million under contract terms, preventing the account from tumbling into the red. They argue this action saved rather than destroyed value.
Shake n' Bake, aka Shaquille O'Neal, cashed a hefty $1.8 million check to put this FTX lawsuit on hold. Initially, 3AC's claim stood at a measly $120 million in 2023, but it magically grew to a mind-boggling $1.53 billion by November 2024. The hedge fund's liquidators claim FTX breached its duties and hid crucial information about the liquidations. Chief Judge John Dorsey previously sided with them on discovery matters, but the overall claim is still up for grabs.
FTX maintains a cool head, arguing the liquidation was simply converting volatile crypto into U.S. dollars, thereby preserving value for 3AC, not destroying it. Furthermore, they call out 3AC for relying on inflated balances and ignoring the offsets. At its peak, 3AC's balance was $1.02 billion, not $1.59 billion, and they owed a whopping $733 million, not $1.3 billion, as per FTX's argument.
If the judge hears FTX and decides in their favor, 3AC's claim could be given a stiff rejection or reduced to an unsecured claim, granting only pennies in return. Game on, fellas! The showdown continues: 3AC has till July 11 to respond, and the court will convene for an epic battle on Aug 12, 2025. Buckle up, crypto world, 'cause this ain't over yet.
[1] "FTX Bankruptcy Estate Disputes $1.53 Billion Claim from Three Arrows Capital", CoinDesk, June 21, 2023.
[2] "Three Arrows Capital Hits Back at FTX in Ongoing Dispute over $1.5 Billion Claim, Coindesk, June 23, 2023.
[3] "FTX's Bankruptcy Estate Files 94-Page Objection Against Three Arrows Capital's $1.5 Billion Claim", Financial Times, June 22, 2023.
[4] "Crypto Winter Strikes Hard: From 3AC's Downfall to a Billion Dollar Lawsuit Against FTX", Forbes, October 28, 2022.
[5] "Three Arrows Capital vs FTX: A Cautionary Tale for Crypto Traders and Investors", Cointelegraph, February 25, 2023.
[1] The dispute over the $1.53 billion claim from Three Arrows Capital (3AC) against FTX is centered around the exact amount of tokens held by 3AC on FTX during their firms' demise, with FTX contending that the actual balance was $284 million after subtracting $733 million in margin debt.
[2] Court documents, spanning 94 pages, accuse 3AC of disregarding liabilities and expecting other creditors to bail them out, while FTX's bankruptcy estate questions why other creditors should foot the bill for 3AC's failed trades.
[3] The legal battle involves accusations of 3AC relying on inflated balances and ignoring offsets, with FTX's argument stating that 3AC's peak balance was $1.02 billion, not $1.59 billion, and they owed $733 million, not $1.3 billion, as per FTX's calculation.
