Key Takeaways
- Three Arrows Capital’s claim against FTX has skyrocketed from $120 million to $1.53 billion.
- Sam Bankman-Fried claims FTX would have repaid all creditors “in kind” if money hadn’t been siphoned away in the bankruptcy process.
- Three Arrows Capital is also pursuing $1.3 billion from Terraform Labs.
Singapore-based crypto hedge fund Three Arrows Capital (3AC) has received approval from U.S. courts to increase the size of its bankruptcy claim against defunct exchange FTX by more than tenfold.
This latest courtroom victory comes after years of battles from the hedge fund, which began in 2022 following the Terraform Labs, FTX, and broader crypto market collapse, forced it to default on over $3.5 billion on loans.
FTX Claim Boosted
As per the ruling, the U.S. Bankruptcy Court for the District of Delaware gave the green light to 3AC liquidators’ request to increase their claim against FTX. Now, 3AC’s $120 million claim has been massively increased to $1.53 billion.
It follows a motion filed by 3AC liquidators Russell Crumpler and Christopher, who filed their initial proof of claim back in June 2023. The claim argued that FTX had liquidated and seized roughly $1.33 billion of 3AC’s assets just two weeks before the latter’s downfall in June 2022.
3AC alleges this could have been avoided and was “unfair” whilst also alleging that FTX had undervalued these assets. The $1.53 billion, as granted by the courts, reflects this value plus additional damages.
The courts highlight that FTX withheld vital records, which forced 3AC liquidators to leverage raw data to evaluate the losses. This resulted in significant delays, and liquidators were unable to confirm the size of the claim until August 2024.
FTX objected, arguing the amendment was filed too late and that increasing the claims would violate the bankruptcy process. Evidently, the courts have disagreed, ruling that the delays are a direct result of FTX.
2022 Repayments
It’s worth noting that this ruling doesn’t automatically grant 3AC $1.53 billion. Instead, this approval claim is subject to further litigation and the FTX creditor redistribution plan.
3AC is also seeking $1.3 billion from Terraform Lab as it bids to recover over $3.3 billion in creditor funds.
Terraform was behind the TerraUSD stablecoin, and its $40 billion collapse, which placed founder Do Kwon in legal hot water and reached a multi-billion settlement with regulators.
According to former FTX boss Sam Bankman-Fried (SBF), FTX always had the liquidity available to pay creditors.
Notably, he hinted that FTX would have been able to pay everyone off, in kind, if regulators and prosecutors hadn’t begun peeling money away through the bankruptcy process.
Eddie is a gaming and crypto writer at CCN. Covering the often weird and wonderful world of Web3 with an adoring, but skeptical eye.
Prior to CCN, Eddie has spent the past seven years working his way through the crypto, finance, and technology industry. He began with PR and journalism with Bitcoin PR Buzz and BitcoinNews.com, eventually working his way to become a copywriter with a dozen firms, including the likes of Polkadot before returning to journalism in 2023.
Having studied Radio production and journalism at University in the UK, Eddie spent a few years making podcasts and presenting on a local London radio station as he built up his writing chops.
A lifelong skateboarder, Eddie can often be found at the skatepark or touring the streets looking for something new to try. That, or kicking back playing JRPGs on his original PSP.
