FTX Disputes 3AC’s $1.5B Claim in Bankruptcy Court

FTX's bankruptcy estate has launched a vigorous challenge against a $1.5 billion claim filed by the defunct hedge fund Three Arrows Capital (3AC), accusing the latter of attempting to offload losses from irresponsible trading onto other creditors. The dispute, detailed in a 94-page legal objection filed in Delaware bankruptcy court, centers on starkly contrasting accounts of 3AC's exposure on FTX during November 2022. FTX's legal team argues that 3AC's claim is fundamentally flawed, emphasizing that the hedge fund's alleged losses were self-inflicted due to high-risk trading strategies. This development underscores the ongoing complexities in the aftermath of FTX's collapse, as creditors and stakeholders jostle for position in the bankruptcy proceedings. The outcome of this dispute could set significant precedents for how claims are handled in future crypto-related bankruptcies.

FTX Challenges 3AC's $1.5B Claim, Alleging Self-Inflicted Losses

FTX's bankruptcy estate is aggressively disputing a $1.5 billion claim from the collapsed hedge fund Three Arrows Capital (3AC), framing it as an attempt to shift losses from reckless trading onto other creditors. The 94-page legal objection, filed in Delaware bankruptcy court, dismisses 3AC's claim as fundamentally flawed.

The Core conflict revolves around wildly divergent accounting of 3AC's FTX exposure during November 2022's market collapse. While the hedge fund asserts $1.6 billion in assets, FTX maintains the net position—after accounting for $733 million in margin debt—stood at just $284 million. Court documents reveal $222 million evaporated from market declines and $60 million was withdrawn by 3AC itself during the crisis.

FTX attorneys argue the hedge fund's revised claim—ballooned from $120 million to $1.53 billion—represents an improper attempt to make creditors bear the cost of failed Leveraged bets. The exchange maintains it liquidated only $82 million of positions, acting within contractual rights to prevent negative balances.

FTX Rejects $1.53 Billion Claim from Bankrupt Hedge Fund 3AC

FTX has formally objected to a $1.53 billion claim filed by the collapsed hedge fund Three Arrows Capital (3AC) in Delaware bankruptcy court. The exchange argues the claim lacks merit, citing 3AC's reckless leveraged bets during the 2022 market crash.

Court documents reveal FTX disputes 3AC's accounting, asserting the fund's actual assets totaled just $1.02 billion with $733 million in liabilities. Market volatility and 3AC's own $60 million withdrawals allegedly reduced recoverable funds to $284 million - a far cry from the disputed amount.

The legal battle highlights the ongoing fallout from crypto's 2022 contagion event, where overleveraged institutions collapsed like dominoes. FTX's rebuttal suggests creditors shouldn't bear responsibility for 3AC's risk management failures.