US Court Boosts 3AC Claim Against FTX to $1.53 Billion in Bankruptcy Battle

On March 13, 2025, at 10:57 AM +03, a US bankruptcy court, specifically the US Bankruptcy Court for the District of Delaware, approved a request by the liquidators of Three Arrows Capital (3AC) to increase their claim against the collapsed cryptocurrency exchange FTX from $120 million to $1.53 billion. This ruling, made by Chief Judge John Dorsey, marks a significant escalation in the ongoing bankruptcy dispute between these two entities, both of which filed for bankruptcy in 2022 amid the crypto market’s turbulent period. This analysis delves into the details, context, and implications of this decision, drawing from various sources to provide a comprehensive overview.

Three Arrows Capital, a once-prominent crypto hedge fund, filed for bankruptcy in July 2022 after suffering substantial losses from the collapse of the Terra/Luna ecosystem in May 2022, which triggered a domino effect in the crypto market. FTX, founded by Sam Bankman-Fried and one of the largest crypto exchanges at the time, followed suit in November 2022 following revelations of financial mismanagement, commingling of customer funds, and a liquidity crisis, as detailed in a CFTC judgment CFTC Obtains $12.7 Billion Judgment Against FTX and Alameda. The shared timeline of their collapses sets the stage for their current legal entanglement, with 3AC seeking to recover assets it claims were mishandled by FTX.

3AC’s liquidators, appointed to manage the fund’s bankruptcy in the British Virgin Islands, initially filed a proof of claim (POC) for $120 million against FTX in the bankruptcy proceedings, aiming to recover assets they believed were improperly transferred before 3AC’s collapse Three Arrows Capital seeks to increase claim against FTX to $1.5B. However, after further investigation and discovery, they uncovered new evidence indicating that 3AC had approximately $1.5 billion in assets on the FTX exchange as of June 12, 2022, as reported in US court gives Three Arrows nod to increase its FTX claim to $1.53B. They alleged that FTX liquidated and seized these assets to settle a $1.33 billion debt, actions they deemed “avoidable and unfair,” causing harm to 3AC’s creditors by undervaluing the assets and breaching trust and contract obligations 3AC Liquidators Seek to Boost FTX Claim to $1.53 Billion from $120 Million.

FTX, in its defense, argued that the liquidation was authorized by an unidentified individual associated with 3AC, suggesting it was a legitimate action to settle debts, as noted in Three Arrows Seeks $1.53 Billion Claim Against FTX. This created a contentious point, with FTX’s debtors, led by CEO John Ray III, objecting to the amendment, claiming it was untimely and introduced new legal theories, potentially slowing down the bankruptcy proceedings US Court Approves 3AC’s $1.53 Billion Claim Against FTX.

On March 13, 2025, Chief Judge John Dorsey ruled in favor of 3AC, stating that the liquidators had provided sufficient notice of their claim and that any delay in filing the amended claim was largely caused by FTX’s failure to share relevant records promptly. The court found that 3AC’s original filing had put FTX “on notice of the possibility of the later asserted claims,” dismissing the debtors’ objections, as detailed in Three Arrows Capital Raises FTX Claim to $1.53B. This approval allows 3AC to pursue a much larger recovery from FTX’s bankruptcy estate, escalating the dispute.