A billion-dollar feud between two bankrupt crypto companies

In 2022, Three Arrows Capital, a crypto hedge fund that was driven to bankruptcy by the collapse of Terra LUNA, is claiming $1.5 billion from another crypto company, FTX, which also went bankrupt during the same period. The liquidators of 3AC claimed in the previous hearing that FTX illegally liquidated a total of $1.53 billion in assets from the hedge fund's account in 2022 and demanded the return of this amount. FTX, on the other hand, has appealed to the court, stating that this allegation is "baseless."

"We went bankrupt because of you"

As a reminder, one of the most praised and prominent companies of that time, Three Arrows Capital, had opened heavily "long" positions on Terra LUNA. Besides Terra LUNA, the company made moves anticipating a rise in the crypto market, but it went bankrupt shortly after the collapse of LUNA in a market that was devastated.

Here are the 3AC lawyers claiming that FTX made some sales without asking them, and as a result, the company went bankrupt.

"No, you made a mistake and sank"

The FTX side states in their objection submitted to the Delaware bankruptcy court that these demands are both unreasonable and lack legal basis. FTX lawyers claim that 3AC expected the market to rise, but when this did not happen, they incurred losses on all their positions.

According to the lawyers, 3AC's own mistake should not be billed to FTX's creditors... According to FTX's lawyers, 3AC's actual usable balance was only 284 million dollars. Therefore, the FTX side does not accept the amount of 1.5 billion dollars in any way.

The deadline for 3AC to respond to FTX's objection has been set for July 11. The hearing regarding the case will be held on August 12.

What had happened?

The 3AC liquidation lawyers intervened in the FTX case for the first time in June 2023. Initially, an amount of 120 million dollars was claimed. However, in November 2024, this figure suddenly increased to 1.53 billion dollars. It was alleged that FTX liquidated assets without permission, that these transactions could have been prevented, and that information sharing was done intentionally.

In March 2025, Chief Judge John Dorsey allowed 3AC's claims to go to court.

Published: June 23, 2025 12:32Last Updated: June 23, 2025 12:47