Lawyers representing the bankrupt cryptocurrency exchange FTX have formally contested a $1.53 billion claim filed against the estate by the liquidators of collapsed hedge fund Three Arrows Capital (3AC). They assert that 3AC’s significant losses resulted from its own high-risk trading activities and dispute the validity of the massive claim amount.
Previously, the US Bankruptcy Court authorized 3AC’s liquidators to escalate their claim against FTX from an initial $120 million to $1.53 billion, alleging breaches of contract and fiduciary duty by the exchange. FTX’s legal team, however, argues that the hedge fund’s failure was a direct consequence of its aggressive, heavily leveraged trading strategies.
Central to the dispute is the valuation of assets within the FTX accounts associated with 3AC. FTX contends the $1.53 billion figure claimed by the liquidators is inaccurate due to discrepancies in account balances. The exchange maintains that the only liquidation action it took against 3AC was for $82 million, which it claims was contractually permitted and executed solely to meet margin requirements and protect the account.
This legal battle forms part of a larger wave of asset recovery efforts across the cryptocurrency sector. Concurrently, 3AC liquidators have initiated a separate $1.3 billion claim against Terraform Labs in its bankruptcy proceeding.
A non-evidentiary hearing concerning the financial and contractual matters between FTX and 3AC is scheduled for August 12 to further deliberate on the contested issues.