FTX Lawyers Torch 3AC’s $1.5B Claim — ‘A Textbook Case of Self-Sabotage’

FTX’s legal team just dropped a Molotov cocktail on Three Arrows Capital’s bankruptcy claim—and the flames aren’t dying down.

The $1.5B Blame Game

Creditors circling the carcass of 3AC got a brutal reality check this week. FTX’s attorneys shredded the hedge fund’s compensation demands, calling their collapse ‘predictable gross mismanagement’ dressed up as a victim narrative.

No Bailouts for Reckless Bets

The filing reads like a post-mortem of crypto’s most infamous margin call. Overleveraged positions? Check. Ignoring risk management 101? Double check. Expecting sympathy after blowing up $3B in investor cash? Not happening.

As one sardonic observer noted: ‘When your hedge fund’s risk model is a Magic 8-Ball, maybe don’t sue the exchange that got liquidated first.’ Case adjourned—with prejudice.

3AC Claims FTX Dumped $1.5B in Assets Weeks Before Its Collapse

3AC claims that FTX liquidated roughly $1.5 billion in its assets just weeks before the hedge fund itself collapsed.

However, FTX attorneys dismissed the claim as resting on “an unreasonable and unsupportable starting premise,” citing “inaccurate figures” and a “blindness to the actual events.”

The filing points to a June 2022 breach of margin requirements by 3AC following the fallout from Terra’s collapse.

According to the objection, when 3AC’s account fell below the required $240 million balance, the firm failed to respond for over six hours. Instead of meeting the shortfall, it allegedly withdrew $18 million in ETH.

FTX then moved to liquidate the account, recovering $82 million. The lawyers argue this MOVE not only complied with credit and margin agreements but also protected the estate from further losses.

FTX lawyers say 3AC’s $1.5 billion claim 'defies logic' and should be tossed

-Lawyers for the FTX bankruptcy estate have objected to a $1.53 billion claim from collapsed trading firm Three Arrows Capital, urging the court to dismiss 3AC’s claim in full.

-The lawyers say 3AC’s… https://t.co/YCMn4AwEs6

Without the liquidation, they claim, 3AC’s account WOULD have been $18 million underwater by the time FTX filed for bankruptcy.

“Forced liquidation was not only permitted but necessary,” wrote Steven Coverick of Alvarez & Marsal, who conducted a forensic review of the transactions.

His findings were submitted alongside the objection. British Virgin Islands King’s Counsel Stephen Atherton also weighed in, dismissing 3AC’s legal arguments under BVI law as flawed.

FTX’s team maintains that 3AC is attempting to recoup losses from its own aggressive trading by targeting the exchange’s creditor pool.

“FTX creditors should not and cannot serve as a backstop for 3AC’s failed trading strategy,” the filing states.

3AC has until July 11 to respond, with a non-evidentiary hearing scheduled for August 12.

Sam Bankman-Fried’s Release Date Set for 2044

FTX founder Sam Bankman-Fried is now projected to be released from federal prison on December 14, 2044, after serving less than 21 years of his 25-year sentence for fraud tied to the FTX collapse.

He was also fined over $11 billion. Federal records confirm that Bankman-Fried has been moved from New York to a transfer facility in Oklahoma following nearly two years behind bars.

The move comes after Bankman-Fried was reportedly placed in solitary confinement earlier this month for giving an unauthorized interview to Tucker Carlson.

His incarceration began in August 2023, after Judge Lewis Kaplan revoked his bail due to allegations of witness tampering involving leaked diary entries from former Alameda CEO Caroline Ellison, who was a key witness in the case.