Lawyers for collapsed crypto exchange FTX have challenged a $1.53 billion claim from the liquidators of hedge fund Three Arrows Capital. The liquidators say FTX owes them that sum for assets it sold in 2022.
FTX counters that the losses came from risky trades and market swings. The dispute is set to play out in Delaware bankruptcy court this summer.
Background of the Claim
Three Arrows Capital’s liquidators first asked FTX for $120 million in June 2023. They widened the request to $1.53 billion in November 2024. Their papers accuse FTX of breaching contract, violating fiduciary duty and unfairly enriching itself.
The liquidators claim FTX held $1.53 billion of Three Arrows Capital’s assets. They say FTX sold those holdings to cover debts, helping trigger the hedge fund’s collapse.
They argue the trades could have been reversed and that FTX delayed handing over data that would have stopped the liquidation sooner.
Court Response
In March, Chief Judge John Dorsey allowed the liquidators to press ahead with their motion. That decision lets the $1.53 billion claim stay in the bankruptcy case.
It does not rule on whether the claim has merit. Instead, it means both sides will argue the full amount before any payment is ordered.
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FTX’s Defence
FTX’s lawyers say Three Arrows Capital lost money through its own actions. They point to market swings and large fund withdrawals. The lawyers note that Three Arrows took a $120 million credit line from FTX to back high-risk trades.
Many of those bets went bad, particularly during the Terra-Luna crash. They add that Three Arrows failed to keep at least $240 million in its FTX account as required.
FTX also disputes how Three Arrows calculated its losses. The hedge fund says it had $1.59 billion in crypto on June 12, 2022. FTX insists the true figure was $1.02 billion.
On the same date, Three Arrows’ dollar balance stood at negative $733 million, not the negative $1.3 billion it claims. FTX says those errors inflate the claimed loss.
Liquidation Was Contractual
In their objection, FTX lawyers say only $82 million worth of crypto was liquidated. They stress that the move was allowed under the credit and margin agreements. The sale simply shifted crypto value into the fund’s U.S. dollar account. It did not shrink the overall balance, they add.
Three Arrows Capital’s liquidators must file their reply by July 11, 2025. A non-evidentiary hearing is set for August 12, 2025.
Judge Karen Owens of the U.S. Bankruptcy Court for the District of Delaware will preside. Both sides will outline their key points, but no witnesses will testify at that stage.
Wider Implications
This fight shows how complex crypto bankruptcies can be. It raises questions about margin calls, data sharing and who bears the risk when markets tumble. The outcome may influence how other crypto firms structure lending deals and manage collateral in volatile times.
As FTX pushes back on the $1.53 billion claim, the Delaware court will decide whether Three Arrows Capital’s losses are its own burden or should fall partly on FTX creditors.
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