Court Approves 3AC’s $1.53B Claim Against FTX: Major Creditor Battle Ahead.

The Delaware bankruptcy court overseeing the FTX estate has made a significant ruling, allowing Three Arrows Capital (3AC) to expand its claim against the estate from an initial $120 million to a staggering $1.53 billion. This decision represents a crucial development in the ongoing fallout from the collapse of Sam Bankman-Fried’s crypto empire.

Background of Three Arrows Capital.

Three Arrows Capital, once a leading crypto hedge fund with reported net assets exceeding $3 billion, faced a dramatic collapse in 2022. At the time, the firm had extensive financial ties to FTX, the crypto exchange founded by Sam Bankman-Fried, which also faced its own catastrophic downfall. Initially, 3AC filed a proof of claim worth $120 million against FTX in July 2023, joining a long list of users and investors who suffered losses due to the exchange’s sudden insolvency.

New Evidence and Expanded Claims.

In November 2024, 3AC’s liquidators amended their claim after uncovering new evidence that FTX had liquidated $1.53 billion in 3AC’s assets just two weeks before the hedge fund initiated its own liquidation proceedings. The liquidators argued that FTX’s liquidation of 3AC’s funds was executed to cover a $1.3 billion liability owed to FTX, a claim that 3AC contended lacked sufficient substantiation.

FTX’s bankruptcy proceedings stated that the $1.3 billion liability was collateral for a loan made to 3AC. However, the court ruled in favor of 3AC, citing insufficient evidence to support FTX’s loan claim. This ruling is pivotal as it highlights the ongoing complexities surrounding the financial dealings between these two major players in the crypto industry.

Impact on Creditor Distributions.

As FTX began distributing funds to creditors in February 2025, the company argued that the expanded claim from 3AC should have been submitted earlier. FTX claimed that the delay would complicate its reorganization plan and burden other creditors. Nevertheless, the court determined that the delay was justified, as the liquidators only discovered the full extent of their claim in mid-2024 due to missing financial records from FTX and a lack of cooperation from 3AC’s founders, Zhu Su and Kyle Davies.

The Fallout from 3AC’s Collapse.

Founded in 2012, 3AC had risen to become one of the most influential financial firms in the cryptocurrency sector by 2022. Its collapse was one of the first major events that triggered a broader downturn in the crypto market, ultimately revealing the fraudulent activities within Sam Bankman-Fried’s empire. Currently, Bankman-Fried is appealing his criminal conviction and 25-year prison sentence.

Following the downfall of 3AC, Zhu Su was detained in Singapore and sentenced to four months in prison for failing to cooperate with the liquidators. Meanwhile, Kyle Davies has not faced any charges related to the hedge fund’s collapse. In 2023, the two founders attempted to re-enter the crypto space by launching a short-lived exchange called OPNX, which was designed to facilitate trading of bankruptcy claims from failed crypto companies.

Future Implications for FTX and 3AC.

With the court’s recent decision, 3AC’s liquidators now hold a significantly larger position in the FTX bankruptcy proceedings. This raises critical questions about how the expanded claim will affect distributions to other creditors. The ruling also emphasizes the ongoing lack of transparency at both FTX and 3AC, complicating efforts to untangle the assets and obligations of both firms.

As the situation continues to evolve, stakeholders in the cryptocurrency market are closely monitoring the developments in this case. The implications of the court’s ruling could have far-reaching effects on the future of both 3AC and FTX, as well as the broader crypto landscape.

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