A US bankruptcy court has permitted liquidators of the defunct crypto hedge fund Three Arrows Capital (3AC) to elevate their claim against the collapsed crypto exchange FTX from $120 million to $1.53 billion.
Chief Judge John Dorsey dismissed the argument from FTX’s debtors that the revised proof of claim (POC) from 3AC liquidators was belated and an unfair effort to hinder the bankruptcy proceedings.
In a ruling on March 13 in the US Bankruptcy Court for the District of Delaware, Dorsey asserted that 3AC liquidators had given adequate notice regarding their claim and the potential for amendment after reviewing all accessible information. He noted that any postponement was due to FTX’s failure to promptly deliver pertinent documents.
Chief Judge John Dorsey has approved the motion by liquidators for the defunct hedge fund Three Arrows Capital to boost their claim against FTX to $1.53 billion. Source:
“The evidence indicates that the delay in submitting the Amended Proof of Claim was primarily caused by the Debtors themselves,” Dorsey remarked.
“The evidence further suggests that the Liquidators acted diligently in trying to acquire the necessary information, and that despite having all the required data in their possession, the Debtors repeatedly postponed providing it.”
Initially, 3AC liquidators lodged a $120 million claim in FTX’s bankruptcy case in June 2023. Subsequently, they expanded it in November 2024, citing allegations of breach of contract, unjust enrichment, and violation of fiduciary responsibilities.
The liquidators asserted that FTX possessed $1.53 billion in hedge fund assets that were liquidated to resolve $1.33 billion in liabilities back in 2022.
They contended that these transactions were avoidable, inflicted harm on 3AC creditors, and that FTX debtors had delayed in providing the information that would have revealed the liquidation.
The FTX debtors opposed the revised claim, arguing that the original POC was inadequate to inform them about the nature and extent of the claim that the 3AC liquidators intended to make, asserting that it was submitted too late and should be rejected.
Related: FTX filed for bankruptcy 2 years ago — What’s happening now?
Prior to its downfall in June 2022, Three Arrows Capital was once among the largest crypto hedge funds in the industry, boasting over $3 billion in assets.
Its liquidators are also pursuing claims against the now-collapsed crypto entity Terraform Labs through a $1.3 billion claim in Terra’s bankruptcy proceedings.
Simultaneously, FTX, which initiated bankruptcy proceedings in November 2022, has been engaged in its own recovery endeavors to reclaim financial resources.
In November of the previous year, it filed multiple lawsuits, one against SkyBridge Capital and its founder, Anthony Scaramucci, aimed at recouping funds expended by former FTX CEO Sam “SBF” Bankman-Fried on sponsorships and investment agreements.
Another lawsuit was lodged against crypto exchange Binance and its former CEO, Changpeng Zhao, seeking to recover $1.76 billion worth of cryptocurrency transferred to the exchange as part of a July 2021 buyback agreement.
Waves founder Aleksandr Ivanov is also under scrutiny for $80 million worth of crypto dispatched to the Waves-based decentralized liquidity protocol by Alameda Research in 2022.
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