3AC Liquidators Seeks $1.5 Billion from FTX in Dispute Over Bankruptcy

Highlights:

• 3AC raises bankruptcy claim against FTX from $120M to $1.5B.
• 3AC claims FTX sold assets at a loss, causing further damage to its finances.
• FTX intensifies lawsuits, including claims against Binance, SkyBridge, and Waves founder.

The liquidators of the collapsed hedge fund Three Arrows Capital (3AC) have raised their bankruptcy claim against FTX from $120 million to a staggering $1.5 billion. In a new filing with a Delaware court, 3AC’s liquidators claimed that two weeks before the hedge fund collapsed, FTX liquidated their assets to settle a $1.33 billion debt.

They emphasized that FTX’s decision to sell these assets at a discounted price hurt their value and played a role in the hedge fund’s collapse. The liquidators said these early sales were “avoidable” and “unfair.” They accuse FTX of focusing on paying off debts rather than preserving asset value.

🧵1/6 Major Update for FTX creditors 🚨

Three Arrows Capital (3AC) is moving to amend its claim against FTX in the Delaware Bankruptcy Court, aiming to boost the claim value from $120M to $1.53 BILLION!💰

Here’s what you need to know:

— MBottjer (@Mbottjer) November 13, 2024

3AC Raises Claim to $1.5 Billion, Accuses FTX of Mismanagement and Poor Handling

The filing marks a significant shift in 3AC’s position. Initially, the hedge fund claimed only $120 million, but it has now raised this to $1.5 billion. 3AC argues that its assets were worth far more than the liquidation value set by FTX. 3AC claims FTX didn’t provide enough details about the liquidation. This made it hard to calculate the total losses until August 2024. The delay has added to 3AC’s accusations of poor handling by FTX.

FTX has responded by highlighting that someone from 3AC authorized the liquidation, although their identity is unknown. The court has yet to determine this person’s role, but FTX insists it was not directly responsible for the liquidation process. The court will address 3AC’s request to amend its claim at a hearing scheduled for November 20.

The legal battle is part of a broader effort by 3AC, which is pursuing claims against other collapsed crypto firms. In August, 3AC’s liquidators filed a $1.3 billion claim against Terraform Labs, the company behind the failed TerraUSD (UST) stablecoin and Luna (LUNA). The claim, filed in a Delaware bankruptcy court, accuses Terraform of misleading 3AC about the stability of its ecosystem, leading to inflated token values and significant investments. The liquidators are seeking damages from the collapse of LUNA and UST.

FTX Intensifies Lawsuits to Recover Funds Amid Bankruptcy Proceedings

FTX has stepped up its efforts to recover funds in its bankruptcy proceedings. This month, the defunct exchange filed several high-profile lawsuits after a court ordered FTX to pay $12.7 billion in customer relief. On November 8, FTX’s bankruptcy estate filed a $100 million lawsuit against SkyBridge Capital and its founder, Anthony Scaramucci, alleging that former CEO Sam Bankman-Fried misused funds in investment deals involving Scaramucci’s firm in 2022.

FTX filed a lawsuit against Anthony Scaramucci and his hedge fund SkyBridge Capital as part of a broader effort to claw back money for creditors of the bankrupt company https://t.co/wHTFhcb95u

— Bloomberg (@business) November 9, 2024

On November 10, FTX’s bankruptcy estate filed a lawsuit against Binance and former CEO Changpeng Zhao. This adds to Binance’s legal troubles this year. FTX claims Bankman-Fried’s $1.75 billion deal with Binance was fraudulent due to FTX’s insolvency. On November 11, Alameda Research also sued Waves founder Aleksandr Ivanov, seeking to recover $90 million in crypto.

FTX sues Binance and ex-CEO Changpeng Zhao (CZ), seeking $1.8 billion. pic.twitter.com/LzvxgzFYx1

— cryptothedoggy (@cryptothedoggy) November 11, 2024