FTX Estate Challenges Three Arrows Capital’s $1.5 Billion Bankruptcy Claim in High-Stakes Legal Battle

In a significant development stemming from the 2022 crypto market collapse, FTX's bankruptcy estate has filed a detailed objection to a $1.5 billion claim by the failed hedge fund Three Arrows Capital (3AC). The 94-page legal filing marks a contentious clash between two of the most prominent casualties of the crypto winter, with billions at stake. The dispute primarily revolves around conflicting accounting methods regarding 3AC's assets on FTX's platform during their simultaneous downfalls. FTX's legal team contends that 3AC's massive losses resulted from market downturns and the fund's own risky trading strategies rather than any wrongdoing by the exchange. This high-profile case sheds new light on the complex financial entanglements between major crypto players during the market crisis and could set important precedents for how such bankruptcy claims are handled in the emerging digital asset space. The outcome may significantly impact creditor recoveries from both bankrupt entities as the crypto industry continues to grapple with the aftermath of the 2022 collapse.

FTX Estate Disputes Three Arrows Capital's $1.5 Billion Bankruptcy Claim

FTX's bankruptcy estate has filed a 94-page objection to a $1.5 billion claim from the collapsed hedge fund Three Arrows Capital (3AC), marking a contentious battle between two major casualties of the 2022 crypto crash. The dispute centers on conflicting accounting of 3AC's assets on FTX's platform during their simultaneous collapses.

FTX attorneys argue 3AC's losses stemmed from market declines and risky trading strategies rather than any actions by the exchange. The estate maintains 3AC's actual net position was $284 million after accounting for $733 million in margin debt, disputing 3AC's claim of a $1.6 billion account balance. "FTX creditors should not be a backstop for 3AC's failed trades," states the filing, characterizing the claim as baseless.

Court documents reveal $222 million of 3AC's position evaporated during June 2022's market downturn, while the hedge fund withdrew $60 million pre-liquidation. FTX executed only $82 million in forced liquidations. The dramatic expansion of 3AC's claim from $120 million to $1.53 billion in November 2024 raises further questions about valuation methodologies.

FTX Rejects $1.53B Claim from 3AC, Citing Market Risks and Legal Grounds

FTX has formally opposed a $1.53 billion claim by the collapsed hedge fund Three Arrows Capital (3AC), labeling it as baseless in a Delaware bankruptcy court filing. The exchange argues that 3AC's losses stemmed from its own Leveraged bets during the 2022 market crash, not FTX's actions.

FTX disputes 3AC's account balance claims, stating the fund's actual assets were $1.02 billion with $733 million in liabilities. After market declines and $60 million in withdrawals by 3AC, only $284 million remained—far below the disputed amount. The exchange emphasizes it liquidated just $82 million of 3AC's assets, asserting the MOVE was legally justified.