The liquidators of the defunct crypto hedge fund Three Arrows Capital (3AC) are seeking to revise their claim against the embattled crypto exchange FTX, increasing it significantly from $120 million to $1.53 billion. The revision is based on allegations of improper liquidation of 3AC’s assets on the platform prior to its collapse.
According to Bloomberg, 3AC’s liquidators claim that just two weeks before the hedge fund went under, FTX liquidated and seized their assets to cover a $1.33 billion debt. The hedge fund argues that these transactions were “avoidable and unfair” and that they caused significant harm to creditors. 3AC is now seeking to have the liquidations invalidated, accusing FTX of undervaluing the assets and breaching both trust and contractual obligations.
In addition, 3AC alleges that FTX delayed providing critical data, forcing the hedge fund to manually parse through raw data to assess the losses. As a result, 3AC was only able to confirm the amount of liquidated assets in August, further compounding their grievance.
FTX Denies Responsibility for Liquidation
FTX, in its response, has stated that the liquidation was initiated by an unidentified individual connected to 3AC, but the exchange has yet to determine the identity of the person involved. The court is scheduled to hold a hearing on November 20 to review 3AC’s motion to amend its claim against FTX.
Beyond FTX: 3AC’s Broader Legal Battles
In addition to its legal actions against FTX, 3AC is pursuing a separate claim against Terraform Labs, the collapsed company behind the TerraUSD (UST) stablecoin and Luna (LUNA) tokens. On August 9, 3AC’s liquidators filed a $1.3 billion claim in Terra’s bankruptcy case, accusing the firm of misleading 3AC about the stability of its crypto assets. Specifically, the liquidators claim that Terra inflated the value of UST and LUNA, which led 3AC to make significant investments in the assets. 3AC is now seeking damages for the direct purchases of these tokens.
FTX Intensifies Legal Efforts to Recover Assets
FTX, which filed for bankruptcy two years ago, has also been stepping up its own legal efforts to recover funds. On November 8, FTX’s bankruptcy estate filed a $100 million lawsuit against SkyBridge Capital and its founder, Anthony Scaramucci, aiming to recover funds that were spent on investments by former FTX CEO Sam Bankman-Fried in 2022.
On November 10, FTX escalated its legal actions by filing a lawsuit against crypto exchange Binance and its CEO, Changpeng Zhao, accusing them of being involved in a fraudulent $1.75 billion repurchase deal. The FTX bankruptcy estate claims that the deal occurred when FTX was already insolvent.
Additionally, on November 11, FTX’s trading arm, Alameda Research, filed a lawsuit against Waves founder Aleksandr Ivanov in an effort to recover approximately $90 million in crypto assets from Waves.
