The legal feud between bankrupt FTX and collapsed Three Arrows Capital (3AC) has intensified, as FTX lawyers formally object to 3AC's $1.53 billion recovery claim.
Background of the Case
The objection was filed in the U.S. Bankruptcy Court for the District of Delaware, where FTX argues that the claim is both unfounded and based on speculative reasoning. The claim originated from an initial demand of $120 million filed by 3AC's liquidators in June 2023, which was later expanded in November 2024 to $1.53 billion.
FTX's Arguments
FTX asserts that 3AC's losses were self-inflicted, as they engaged in high-risk investments that collapsed when the cryptocurrency markets crashed in 2022. FTX points out that on June 12, 2022, 3AC's actual balance was $1.02 billion, significantly less than the $1.59 billion claimed. FTX maintains that only $284 million of 3AC's funds were actually available, and the $82 million liquidation was contractually permitted.
Future of the Litigation
3AC has until July 11 to respond to FTX's objection, and a hearing is scheduled for August 12 before Chief Judge Karen Owens. The outcome may have broader implications for creditor payouts in ongoing bankruptcy cases in the cryptocurrency industry.
The case between FTX and Three Arrows Capital continues to unfold, with potential significant consequences for both companies in their legal battles with other collapsed firms.
