FTX’s bankruptcy estate has formally challenged a $1.5 billion claim filed by Three Arrows Capital (3AC), disputing the hedge fund’s attempt to recover losses from its high-risk crypto positions.
The legal contention revolves around the actual value of 3AC’s holdings on FTX at the time of both entities’ collapse, with FTX asserting a significantly lower net balance after accounting for margin debts.
According to COINOTAG, the FTX Recovery Trust described 3AC’s claim as “illogical and baseless,” emphasizing that FTX creditors should not bear the burden of 3AC’s failed leveraged trades.
FTX disputes Three Arrows Capital’s $1.5 billion claim, highlighting margin debts and liquidation details that could limit 3AC’s recovery in the ongoing bankruptcy case.
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The ongoing legal battle between FTX’s bankruptcy estate and Three Arrows Capital centers on the valuation of 3AC’s account at the time of the crypto market crash in mid-2022. While 3AC asserts its account balance was nearly $1.6 billion, FTX’s Recovery Trust counters that the actual net value was closer to $284 million after deducting $733 million in margin debt. This significant discrepancy forms the crux of the dispute, with FTX’s legal team arguing that 3AC’s claim ignores its liabilities and unfairly seeks to transfer losses to other creditors.
FTX’s objection filing details how most of the $284 million net value evaporated during a sharp two-day market downturn in June 2022, with $222 million lost to market declines and $60 million withdrawn by 3AC itself. The estate emphasizes that only $82 million was liquidated by FTX, a move fully compliant with contractual terms designed to protect the account from going negative. This liquidation, FTX argues, was a necessary step to preserve value rather than a punitive seizure of assets.
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Source: https://en.coinotag.com/ftx-bankruptcy-estate-challenges-three-arrows-capitals-1-5-billion-crypto-claim/