Is This $1.53B Claim a ‘Risk Dump’ Attempt?

• FTX lawyers argue 3AC’s $1.53B claim is based on speculative losses from its own failed crypto bets.
• The only liquidation FTX acknowledges is an $82M trade that allegedly benefited 3AC by preserving value.
• As FTX proceeds with its $16.5B recovery plan, legal battles with collapsed firms and celebrities rage on.

The new management team for the collapsed crypto exchange FTX has formally objected to a $1.53 billion claim from Three Arrows Capital (3AC). In a new court filing, they argue the claim is a “baseless” attempt to force other FTX creditors to pay for the defunct hedge fund’s own failed trading bets.

FTX: “You Lost the Bet — Don’t Blame Us”

In a sharply worded objection filed in Delaware bankruptcy court, FTX’s legal team accuses 3AC of trying to rewrite history. According to FTX, the hedge fund made aggressive, leveraged bets on a crypto market rebound, and when those bets failed, it tried to push the losses onto FTX’s bankruptcy estate.

“The Joint Liquidators ask this Court to force other Exchange customers and creditors to foot the bill for 3AC’s failed strategy,” FTX attorneys wrote. “These claims are illogical and baseless.”

FTX insists that 3AC only had $284 million in real account value, not the $1.59 billion the liquidators are claiming. Furthermore, it alleges that 3AC withdrew $60 million itself before the market fully collapsed.

Related: Shaquille O’Neal Agrees to a $1.8 Million Settlement in FTX Class-Action Lawsuit

$1.53B or $284M? The Numbers Don’t Match

The legal friction centers on the account balance as of June 12, 2022, just before both firms imploded. 3AC claims its assets were wrongly liquidated by FTX to settle internal liabilities. But FTX argues that only $82 million was liquidated, and that this was done in accordance with contract terms to maintain margin requirements.

FTX’s objection points out that this liquidation actually helped 3AC, shifting deteriorating digital assets into stable fiat. That money wasn’t lost–it was transferred to the fiat side of the 3AC account. The filing states:

“Notably, the $82 million Liquidation benefited 3AC by preserving the value of the 3AC Accounts,”

3AC now has until July 11 to reply to the objection, with a non-evidentiary hearing scheduled for August 12 before Chief Judge Karen Owens. The dispute is part of a broader legal storm in the crypto world, where failing firms and defrauded investors scramble to recover billions.

Related: FTX will distribute over $5 Billion in stablecoins to creditors on Friday this week

3AC has also filed a $1.3 billion claim in Terraform Labs’ bankruptcy case, another sign the firm is working to claw back capital wherever possible.

FTX’s Recovery Effort Gains Steam

While fighting off massive claims like 3AC’s, FTX is also moving forward with customer reimbursements. It has now begun its second wave of distributions, totaling over $5 billion, and is partnering with fintech firm Payoneer to facilitate global payments.

The broader recovery plan, worth between $14.7 billion and $16.5 billion, is based on customers’ dollar-denominated balances as of the bankruptcy date, a move that has drawn criticism given the market was crashing at the time.