The Delaware bankruptcy court overseeing the FTX estate granted a request on Thursday from Three Arrows Capital (3AC) to expand its claim against the estate from $120 million to $1.53 billion. This development is significant in the aftermath of the collapse of Sam Bankman-Fried’s cryptocurrency empire.
3AC, previously a prominent crypto hedge fund with assets exceeding $3 billion, collapsed in 2022 with financial ties to FTX, Bankman-Fried’s failing crypto exchange. Initially, the hedge fund filed a $120 million claim against FTX in July 2023, joining other users and investors who suffered losses due to FTX’s insolvency.
In November 2024, 3AC’s liquidators adjusted their claim after discovering evidence that FTX had liquidated $1.53 billion of 3AC’s assets shortly before the hedge fund’s collapse. They argued that FTX’s actions were to fulfill a $1.3 billion liability, which 3AC disputed as unsubstantiated.
FTX claimed the $1.3 billion was collateral for a loan to 3AC, but the court favored 3AC due to insufficient evidence supporting FTX’s loan assertion.
The ruling enables 3AC to pursue a larger portion of FTX’s remaining assets, potentially altering creditor payouts.
FTX, distributing funds to creditors since February 2025, expressed concerns about the expanded claim, citing potential burdens on other creditors and complicating its reorganization plan. However, the court justified 3AC’s delay in filing the expanded claim, citing missing financial records from FTX and lack of cooperation from 3AC’s founders, Zhu Su and Kyle Davies.
Founded in 2012, 3AC emerged as a significant player in the crypto industry by 2022. Its collapse preceded the broader crypto market crash in 2022, exposing fraud in Bankman-Fried’s empire.
Bankman-Fried is appealing his criminal conviction and 25-year prison sentence. Su faced detention in Singapore and a four-month prison term for non-cooperation with 3AC’s liquidators. Davies did not encounter legal repercussions related to the hedge fund’s downfall.
In 2023, the 3AC founders launched OPNX, a short-lived crypto exchange allowing users to trade bankruptcy claims of failed crypto companies, which ceased operations in February.
3AC’s liquidators now hold a larger stake in FTX’s bankruptcy proceedings, raising questions about the impact on creditor distributions. The ruling highlights transparency issues at FTX and 3AC, complicating efforts to resolve both firms’ assets and obligations.
