- A U.S. court approved 3AC’s claim increase against FTX from $120 million to $1.53 billion.
- The court ruled that FTX’s failure to share records caused delays, not 3AC’s late filing.
- With 3AC’s expanded claim approved, FTX may need to adjust its bankruptcy repayment plans.
Three Arrows Capital (3AC) has been granted permission to increase its claim against FTX from $120 million to $1.53 billion. The ruling came from the U.S. Bankruptcy Court for the District of Delaware. It rejected FTX’s objections, stating that 3AC had filed its claim on time. The court also found that delays were mainly due to FTX’s failure to share records.
Three Arrows Capital initially filed its claim in June 2023. Later, its liquidators sought a significantly higher amount, citing breach of contract, unjust enrichment, and fiduciary duty violations. They also claimed damages for turnover, restitution, and other financial losses. The expanded claim argued that FTX’s actions had worsened 3AC’s financial troubles.
FTX Opposes Claim Increase
FTX’s bankruptcy estate opposed the increase, calling it excessive and disruptive. It argued that the sudden rise in 3AC’s claim would harm its restructuring process. The estate argued that its reorganization plan did not account for this claim. With FTX already in the process of repaying creditors, it expressed concerns that the new claim would disrupt payout calculations.
Despite these concerns, the court ruled in favor of 3AC. It stated that FTX failed to provide enough evidence to block the claim. The ruling also pointed out that 3AC’s original filing had left room for additional claims. This meant the expansion was not unexpected or unfair.
Impact on FTX Creditors
Following this decision, 3AC now holds a significantly larger claim to FTX’s remaining assets. FTX, which started fund distributions last month, may need to revise its bankruptcy plans. The case adds new uncertainty for those waiting for settlements.
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Three Arrows Capital was once a leading crypto hedge fund. Founded by Su Zhu and Kyle Davies, it was involved in the management of billions of assets. However, the firm collapsed in 2022 due to the Terra-Luna crash, resulting in massive losses. Further investigations revealed significant risk management failures within the company.
This court ruling can be considered as a new addition to all existing complications of FTX’s bankruptcy. Given the approval of 3AC’s billion-dollar claim, further legal disputes may arise. The case shows there are still lingering consequences of big cryptocurrency failures.
