FTX Challenges $1.53 Billion Claim by Three Arrows Capital

The FTX bankruptcy team is countering a significant $1.53 billion claim filed by the bankrupted hedge fund, Three Arrows Capital (3AC). According to FTX’s legal submission, this claim is not only exaggerated but also constructed on flawed premises and inadequate risk management by 3AC itself. Legal documents from FTX denote that 3AC’s claim inadequately recognizes critical details regarding margin violations and fund withdrawals.

What Really Happened With the 3AC Account

Back in 2022, 3AC had a notable margin trading account on the FTX platform during a period when the cryptocurrency market was suffering due to the collapse of Terra and prevailing unfavorable sentiment. They had borrowed and leveraged large amounts, but as market conditions worsened, FTX enforced margin alerts indicating the account fell short of required margins.

⚖️ Lawyers for the #FTX bankruptcy estate object to a $1.53B claim from the failed trading entity 3AC, citing that the losses were primarily due to 3AC’s actions.

— Mpost Media Group (@mpost_io) June 23, 2025

3AC allegedly went silent for over six hours and opted to withdraw $18 million in Ethereum, prompting FTX to liquidate their positions to prevent greater losses. FTX maintained that their liquidation actions were permissible under the terms of their agreement and essential to mitigate further risks. Following liquidation, the account still had $82 million, suggesting extending the position would have resulted in a negative balance.

Why FTX Believes the Claim Is Inflated

FTX’s legal representatives are urging the Delaware bankruptcy court to dismiss the entire claim, arguing that 3AC is attempting to shift the blame for its decisions onto FTX. They contend that 3AC’s considerable leverage, delayed reactions, and ill-timed fund withdrawals damaged the account, compelling FTX to terminate it.

To reinforce its argument, FTX consulted Alvarez & Marsal to reanalyze the trading information, concluding that the liquidation was warranted. A legal expert from the British Virgin Islands, where 3AC was established, concurred that the legal framework supporting 3AC’s claim was unsound.

FTX’s assessment states that the crypto balance in 3AC’s account was approximately $1.02 billion; however, factoring in liabilities and market dip losses trimmed the actual balance significantly. Therefore, FTX argues that 3AC’s assertion of being owed $1.53 billion does not align with the reality of the situation.

What Comes Next in the Case

3AC has until July 11 to respond formally to FTX’s objection, and a court hearing is set for August 12 in Delaware, where a judge will determine the validity of 3AC’s $1.5 billion claim.

FTX’s bankruptcy proceedings still involve substantial amounts of money, with various creditors awaiting information. This case may set a precedent about how claims are treated in future disputes among failed crypto firms and could influence how such claims may be resolved.