FTX Objection to Three Arrows Capital’s $1.53 Billion Claim

TLDR

• 3AC’s claim increased from $120 million to $1.53 billion.
• Approval could reduce recovery for other FTX creditors by 20%.
• No on-chain data available to support legal arguments.

Lawyers representing the bankruptcy estate of FTX Trading Ltd. have filed an objection against a $1.53 billion claim made by the collapsed trading firm, Three Arrows Capital (3AC). The lawyers argue that 3AC’s account was worth approximately $284 million at the time of FTX’s collapse, significantly less than the claim amount.

FTX was a leading cryptocurrency exchange before its dramatic collapse in November 2022 due to alleged fraud and insolvency. On the other hand, Three Arrows Capital was once a multi-billion-dollar crypto hedge fund managed by Su Zhu and Kyle Davies. It also collapsed in 2022, sending shockwaves across the crypto financial system.

Dispute over Bankruptcy Claims

The dispute centers around 3AC’s attempt to increase its FTX-related claim from $120 million to $1.53 billion. The claim was originally filed in March 2025. 3AC has argued that FTX liquidated $1.53 billion of its assets shortly before 3AC’s collapse, claiming that it affected the fund’s stability. However, the court sided with 3AC due to FTX’s missing records and lack of transparency.

FTX’s legal counsel has formally objected to the timing and scale of 3AC’s claim. The FTX estate believes that a previous liquidation was sufficient to satisfy a $1.3 billion loan, but this defense was not substantiated with adequate evidence, leading to complications in the legal proceedings.

Potential Impact on Creditors

Approval of 3AC’s $1.53 billion claim could significantly reduce the recovery pool for other FTX creditors, as noted by Louis D’Origny, CFO of FTX Creditors. He stated, “The ruling would also increase the claim pool by 20%, which would be a disaster for customer creditors…”

Foreseen adjustments could largely redirect available funds to 3AC’s creditors instead of FTX’s defrauded users. Therefore, this reallocation of funds may yield significantly lower recoveries for prior stakeholders of FTX.

Assets and On-Chain Data

The disputed assets reportedly involved FTX’s liquidation of 3AC’s holdings, including liquid cryptocurrencies such as BTC and ETH. However, no specific information on wallets or transactions has been disclosed in primary legal documents.

As per the available records, no direct on-chain data like transaction tables or liquidity migrations are available to illustrate the flow changes occurring due to this legal battle.

Precedent and Community Response

Legal battles over creditor claims aren’t rare in crypto bankruptcies, akin to earlier cases such as Mt. Gox and Celsius Network. Should this claim be approved, it might set a precedent for accepting amendments to claims at late stages, subject to judicial discretion.

Meanwhile, discussions are active in creditor and legal circles, particularly on platforms like Twitter and Telegram, debating creditor fairness and the potential legal setting for future bankruptcy cases.

For further details about the legal proceedings, the FTX Memorandum Opinion on the motion to amend proof of claim provides in-depth insights into the case’s complexity.

These ongoing disputes will hold significance as they unfold, should more regulatory or institutional verdicts be rendered in this high-profile legal case.