FTX Responds to Three Arrows Capital’s $1.53 Billion Demand
The group managing FTX’s bankruptcy is contesting a substantial claim made by the defunct hedge fund Three Arrows Capital, commonly referred to as 3AC. The assertion of $1.53 billion, as noted in FTX’s legal documents, is described as not only overstated but also rooted in incorrect assumptions and inadequate risk management practices by 3AC itself. FTX contends in court filings that 3AC’s claim of $1.5B overlooks critical details regarding margin violations and withdrawals from their fund.
Central to the conflict are a series of leveraged trades executed by 3AC on the FTX network prior to the downfall of both entities. FTX claims that 3AC neglected margin calls, chose to withdraw funds rather than provide additional collateral, which ultimately compelled FTX to liquidate their positions. Currently, 3AC’s liquidators are attempting to persuade the court that FTX owes them an amount exceeding one billion dollars.
The Actual Events Surrounding the 3AC Account
In 2022, 3AC maintained a significant margin trading account with FTX. This coincided with a period when the broader digital currency crypto market was under pressure following the Terra collapse and a general decline in trust. 3AC had borrowed capital and placed significant wagers on the exchange. As trading market conditions deteriorated and the value of their positions fell, FTX asserts that it issued alerts indicating that the account had breached margin requirements.
Attorneys for the #FTX bankruptcy estate have contested a $1.53B claim from the failed trading firm Three Arrows Capital, claiming that #3AC’s actions were responsible for its financial losses.
FTX points out that 3AC’s extensive spot and margin trading—partially funded by a $120M credit line from… pic.twitter.com/DjDZy82stw
— Mpost Media Group (@mpost_io) June 23, 2025
Court documents reveal that 3AC remained silent for over six hours and chose instead to withdraw $18 million in Ethereum from their account. FTX subsequently liquidated the positions, asserting that this action was not only permitted under the contractual terms but also essential to avert further losses. Following the liquidation, the account still contained $82 million, and FTX argues that prolonging the position would have resulted in a negative balance.
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Reasons Behind FTX’s Claim That It Is Overstated
FTX’s legal representatives are requesting that the Delaware bankruptcy court dismiss the entire claim. They maintain that 3AC is attempting to rewrite the narrative by holding FTX accountable for its own misguided actions. From their perspective, the hedge fund’s excessive exposure, delayed reactions, and poorly timed withdrawals created a deficit in the account. Thus, FTX was left with no alternative but to liquidate.
To bolster its position, FTX engaged a consultant from Alvarez & Marsal, who analyzed the trading data and determined that the liquidation was warranted. Additionally, a legal authority knowledgeable in British Virgin Islands law, where 3AC was established, also provided insights, stating that 3AC’s legal rationale was unsubstantiated.
The figures also don’t seem to add up. FTX claims that the crypto balance in 3AC’s account amounted to approximately $1.02 billion, but once liabilities, withdrawals, and losses incurred during the trading market downturn are factored in, the ultimate balance was significantly less. FTX contends that 3AC’s assertion of being owed $1.53 billion does not accurately represent the actual circumstances.
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Upcoming Developments in the Case
3AC’s representatives have until July 11 to officially reply to the objection. =””>reserver-spaces=”true”>>A court session is set for August 12 in Delaware, where a judge will determine how much, if any, of 3AC’s $1.5B claim will be allowed to proceed.
FTX’s bankruptcy proceedings continue to freeze billions, leaving numerous creditors seeking resolution. This case could significantly impact the timeliness and fairness of the distribution of remaining funds. It further prompts discussion on how claims between failed crypto asset enterprises should be addressed, particularly when both entities have committed substantial errors. 3AC’s $1.5B claim could redefine the approach towards dispute resolution between collapsed crypto firms.
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Key Takeaways
- FTX is contesting a $1.53 billion claim from Three Arrows Capital, labeling it exaggerated and founded on incorrect premises.
- FTX alleges that 3AC did not comply with margin calls, withdrew $18 million in Ethereum, and compelled FTX to liquidate its account to avert further losses.
- A consultant analyzed the trading data, confirming the justification for liquidation, and a legal professional from the BVI contested the foundation of 3AC’s assertion.
- FTX maintains that the remaining value of the account does not substantiate a claim exceeding $1 billion when liabilities and withdrawn assets are considered.
- The court is set to hear the case on August 12, and 3AC is required to respond to FTX’s objection by July 11.
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