In a recent court filing, the bankrupt crypto exchange FTX argues that the downfall of Three Arrows Capital (3AC) was due to their own risky trading.
FTX's Allegations Against 3AC
FTX asserts in its filing that 3AC holds no responsibility for the losses it incurred during the crypto market crash in June 2022. The exchange insists that 3AC must answer for its own actions.
Reasons Behind 3AC's Collapse
FTX's legal team states that 3AC borrowed heavily to bet on rising crypto prices despite lacking necessary capital. When the market turned, those leveraged positions unraveled quickly. '3AC bet big that cryptocurrency prices would increase using cash it did not have,' FTX’s attorneys stated. 'When prices instead plummeted, 3AC liquidated its risky bets and pulled funds from FTX.'
Implications for Crypto Bankruptcy Cases
This dispute now stands at the center of one of the most high-profile bankruptcies in crypto. 3AC, which collapsed in mid-2022, is seeking to recover over $1.5 billion in assets it claims were lost while dealing with FTX. FTX, also undergoing bankruptcy proceedings, maintains that the claim is unjustified and should be dismissed. This case could set a precedent for how courts handle risk and accountability when multiple collapsed firms attempt to recoup losses from one another.
In conclusion, the FTX vs. Three Arrows Capital case highlights the importance of understanding risk in the crypto industry and may have a lasting impact on business practices in the field.
