3AC Files Explosive Lawsuit Against FTX Executives - Crypto’s Legal Battle Heats Up
Crypto's most dramatic legal showdown just dropped—and it's personal.
Three Arrows Capital, the collapsed hedge fund that once ruled crypto's bull market, just launched a scorched-earth lawsuit against FTX's top brass. The filing alleges everything from market manipulation to breach of fiduciary duty—turning up the heat in an industry already boiling with regulatory scrutiny.
The Fallout
Sources close to the case suggest 3AC is seeking billions in damages, claiming FTX executives engaged in practices that directly contributed to their catastrophic collapse. The timing couldn't be more brutal—just as markets show signs of recovery, old wounds are ripped wide open.
Legal experts are calling this the crypto equivalent of a nuclear option. One attorney quipped, 'This isn't just throwing stones from glass houses—it's launching entire skyscrapers.'
Industry Impact
The lawsuit could set precedent for how crypto giants handle—or mishandle—counterparty risk. Expect regulators to watch this one like hawks, probably while drafting another hundred pages of compliance requirements.
Because nothing says 'financial innovation' like billion-dollar companies suing each other into oblivion while retail investors hold the bag.
3AC files lawsuit against FTX executives
According to a legal notice filed in the US Bankruptcy Court for the District of Delaware on September 9, 3AC’s joint liquidators, Russell Crumpler and Christopher Farmer, plan to depose Bankman-Fried under Rule 45 of the Federal Rules of Civil Procedure.
The MOVE comes after 3AC co-founder Zhu Su accused Bankman-Fried of liquidating $1.5 billion of their positions without proper justification.
Ryne Salame was accused of using insider information to front-run trades against client positions, which resulted in a cash out of over $1 billion before the FTX collapse.
Ellison, who ran Alameda Research during the time of the alleged actions, is also expected to be questioned over the interconnected trading and liquidation strategies that may have pushed 3AC into insolvency.
The subpoenas are part of broader recovery efforts being made following the bankruptcies of both FTX and 3AC. The court cases have been relentless, but despite efforts, billions in investor funds remain unaccounted for, forcing liquidators to intensify efforts to investigate the former executives.
Bankman-Fried is expected to give a testimony that will reportedly be recorded via video and stenographic means and subject to prison protocols. However, only time will tell if these proceedings will lead to additional criminal referrals or civil claims.
FTX is set to start the next round of cash distributions
According to Cryptopolitan’s report, the next round of FTX’s cash distributions to creditors will begin on or around September 30, 2025. The record date for eligible claimants was set for August 15.
The payments will reportedly be processed via FTX’s designated distribution partners, including BitGo, Kraken, and Payoneer. It started repaying creditors earlier this year after securing court approval for its redistribution plan, and to date, has returned approximately $6.2 billion.
The once dominant exchange in the crypto space collapsed in November 2022 following a liquidity crisis triggered by revelations about its balance sheet.
The fallout from that crisis implicated founder Sam Bankman-Fried. He was sentenced in 2023 to 25 years in prison for the role he played in defrauding customers and investors of more than $11 billion.
He has been fighting to get out ever since, and all things being equal, is now expected to gain his freedom on December 14, 2044, after serving less than 21 years of his 25-year sentence for fraud tied to the FTX collapse for good behavior.
The former CEO, who was also fined over $11 billion and records, is currently being held at a transfer facility in Oklahoma following nearly two years behind bars.
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