The FTX bankruptcy estate has formally contested a $1.5 billion claim filed by liquidators of failed crypto hedge fund Three Arrows Capital (3AC), asserting the actual net value of 3AC’s holdings was substantially lower than claimed.
FTX’s legal team argues that 3AC’s claim ignores $733 million in margin debt, reducing the net value to approximately $284 million. They contend the hedge fund’s estate seeks to unfairly transfer losses to other creditors by overlooking these liabilities.
According to court filings, most of the $284 million net value was lost during market declines, with FTX liquidating only $82 million worth of assets. This challenges the foundation of 3AC’s significantly higher claim amount.
The dispute centers on 3AC’s claim expansion from $120 million in 2023 to $1.53 billion by 2024. 3AC liquidators allege FTX breached fiduciary duties through delayed disclosure of liquidation details, contributing to the valuation discrepancy.
An upcoming August 12 court hearing will determine the validity of 3AC’s claim. The outcome may establish precedent for handling claims from collapsed cryptocurrency hedge funds in bankruptcy proceedings.