A US court has ruled in favor of the liquidators of Three Arrows Capital (3AC), allowing them to increase their claim against the bankrupt crypto exchange FTX from $120 million to $1.53 billion.
Court's Decision
Chief Judge John Dorsey dismissed the arguments from FTX debtors that the amended claim from 3AC liquidators was inappropriate and could delay bankruptcy proceedings. Dorsey highlighted that much of the delay was caused by FTX's failure to provide necessary documents.
Grounds for 3AC's Claims
3AC liquidators initially filed a $120 million claim in FTX's bankruptcy case in June 2023. They later expanded it in November 2024, citing breach of contract, unjust enrichment, and breach of fiduciary duty. They claim FTX held hedge fund assets liquidated to cover liabilities amounting to $1.33 billion in 2022. The liquidators argue the transactions were avoidable and harmed 3AC creditors.
Related Lawsuits and Context
Before its collapse in June 2022, Three Arrows Capital was one of the largest crypto hedge funds with over $3 billion in assets. The liquidators have also pursued claims against Terraform Labs through a $1.3 billion claim. Concurrently, FTX, which declared bankruptcy in November 2022, has been recovering funds through lawsuits against SkyBridge Capital, Binance, and others.
The decision to allow 3AC liquidators to increase their claim against FTX marks a significant development in these intertwined bankruptcy cases, illustrating the complex dynamics in the crypto world.
