Key Insights:
- Three Arrows Capital’s claim against FTX increased from $120 million to $1.53 billion, complicating creditor payouts.
- The FTX estate contended that this claim amendment is untimely, affecting the distribution of other creditors’ funds.
- FTX had liquidated $1.53 billion in 3AC’s assets, shortly before its collapse, defending it as a way to address a $1.3 billion loan — a stance dismissed due to lack of proof.
- The court favored Three Arrows Capital, citing transparency issues from FTX.
The Delaware bankruptcy court overseeing the FTX estate approved a petition from Three Arrows Capital (3AC) on Thursday to significantly increase its claim from $120 million to $1.53 billion, a pivotal shift in the fall-out from the collapse of Sam Bankman-Fried’s crypto venture.
3AC, a major player in the crypto hedge fund landscape, fell apart in 2022 while still closely linked to FTX. Initially, it filed a claim of $120 million in July 2023 to join the ranks of users affected by FTX’s insolvency.
In November 2024, liquidators representing 3AC revised their claim upon learning new information that indicated FTX had dismissed $1.53 billion in assets just weeks before 3AC’s liquidation.
The court recognized the amended claim, despite FTX’s objections regarding the timing, corroborating that the delay was warranted due to incomplete financial records from FTX and non-cooperation from 3AC’s founders.
With this ruling, Three Arrows Capital’s liquidators greatly enhance their stake in the ongoing FTX bankruptcy proceedings, raising concerns of how this enlarged claim might affect payments to other creditors.
