- 3AC liquidators’ claim against FTX increased from $120 million to $1.53 billion after court approval.
- Judge Dorsey ruled FTX caused delays by failing to promptly share relevant financial records.
- The expanded claim alleges breach of contract, unjust enrichment, and breach of fiduciary duty related to $1.53 billion in hedge fund assets.
A U.S. bankruptcy court has granted liquidators of Three Arrows Capital (3AC) permission to dramatically increase their claim against collapsed cryptocurrency exchange FTX from $120 million to $1.53 billion. The ruling, delivered by Chief Judge John Dorsey in the District of Delaware, rejected FTX debtors’ objections that the amended claim was filed too late.
The March 13 decision favored 3AC liquidators after Judge Dorsey determined they had provided sufficient notice of their potential claim amendments once they could analyze all available information. The judge placed responsibility for delays squarely on FTX, noting: “The evidence suggests that the delay in filing the Amended Proof of Claim was, in large part, caused by the Debtors themselves.”
Dorsey further emphasized that “The evidence also suggests that the Liquidators were diligent in attempting to obtain the information and that despite having the complete information in their possession, the Debtors repeatedly delayed giving it to them.”
The legal dispute began when 3AC liquidators filed their initial $120 million proof of claim in June 2023 during FTX’s bankruptcy proceedings. This claim was later expanded in November 2024 to $1.53 billion, with liquidators alleging that FTX had held significant hedge fund assets that were liquidated to settle $1.33 billion in liabilities back in 2022.
The expanded claim includes allegations of breach of contract, unjust enrichment, and breach of fiduciary duty. 3AC liquidators argue these transactions harmed creditors and could have been avoided, claiming FTX deliberately delayed providing information that would have revealed the full scope of the liquidation.
FTX attempted to block the amended claim, arguing it came too late in the bankruptcy process and that the original proof of claim failed to adequately inform them about the nature and amount 3AC would ultimately claim.
Before its spectacular collapse in June 2022, Three Arrows Capital was among the cryptocurrency industry’s largest hedge funds, managing over $3 billion in assets. Its liquidators have been aggressively pursuing various claims, including a separate $1.3 billion claim against Terraform Labs in that company’s bankruptcy case.
Meanwhile, FTX, which filed for bankruptcy in November 2022, has launched its own recovery efforts to reclaim funds. In November last year, the company filed three significant lawsuits:
1. Against SkyBridge Capital and founder Anthony Scaramucci to recover funds spent by former CEO Sam “SBF” Bankman-Fried on sponsorship and investment deals
2. Against crypto exchange Binance and former CEO Changpeng Zhao, seeking to recover $1.76 billion in cryptocurrency from a July 2021 repurchase agreement
3. Against Waves founder Aleksandr Ivanov for $80 million in crypto assets sent to the Waves-based decentralized liquidity protocol by Alameda Research in 2022
The ruling represents a significant victory for 3AC creditors and adds another complex layer to FTX’s already challenging bankruptcy proceedings.
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