Three Arrows Capital dropped a bombshell with its $1.53 billion claim against FTX, exposing a secret liquidation that occurred weeks before 3AC's bankruptcy. What started as a $120 million dispute ballooned into a billion-dollar nightmare, rattling crypto creditors worldwide. FTX, already neck-deep in its own collapse and fraud charges, faces mounting pressure from courts and critics. The revelation exposes just how deeply intertwined these crypto giants were. The rabbit hole goes much deeper.
While crypto hedge fund Three Arrows Capital (3AC) was busy imploding in June 2022, FTX was secretly liquidating $1.53 billion of its assets. The crypto world only discovered this bombshell recently, and it's a doozy. What started as a relatively modest $120 million claim against FTX has exploded into something far more dramatic.
Turns out FTX wasn't just sitting on its hands during 3AC's collapse. Two weeks before 3AC's bankruptcy, they were busy liquidating billions in assets to cover $1.3 billion in liabilities. Talk about keeping secrets. The British Virgin Islands court placed a substantial freeze of $1.14 billion on the assets of co-founders Kyle Davies and Su Zhu. The revelation has completely upended the previous narrative about 3AC's market-driven downfall.
FTX secretly liquidated billions in 3AC assets before bankruptcy, shattering the story of a simple market collapse.
The US Bankruptcy Court didn't take FTX's objections seriously. When FTX tried arguing that the amended claim was too late and too broad, Judge John T. Dorsey basically said, "Nice try." He pointed out that FTX's own foot-dragging on document requests contributed to the delays. The collapse of the TerraUSD stablecoin played a crucial role in setting these events in motion. Karma's funny that way.
This mess gets even messier when you consider that FTX itself crashed and burned in November 2022, with Sam Bankman-Fried facing fraud charges. The once-mighty crypto exchange, now trying to reorganize its way out of bankruptcy, suddenly has another billion-dollar headache to deal with.
The investigation hasn't been easy. 3AC's founders haven't exactly been helpful, and getting documents from FTX has been like pulling teeth. But the liquidators kept digging, and what they found was enough to convince the court that the massive claim expansion was justified.
It's a stark reminder of just how intertwined these crypto giants were. Three Arrows Capital, once managing over $3 billion in assets, was a major player before everything went south. Their collapse triggered a domino effect that took down several crypto lenders.
Now, with this $1.53 billion claim against FTX approved, creditors across the crypto landscape are recalculating their expectations. Sometimes the biggest surprises in crypto have nothing to do with price movements.
