The Delaware chapter court docket dealing with the FTX property accepted a petition on Thursday from Three Arrows Capital (3AC) to considerably broaden its declare in opposition to the property from $120 million to $1.53 billion, marking a serious improvement within the ongoing fallout from the collapse of Sam Bankman-Fried’s crypto empire.
3AC, as soon as a dominant crypto hedge fund with over $3 billion in reported internet property, collapsed in 2022 whereas it nonetheless had deep monetary ties to FTX, Sam Bankman-Fried’s soon-to-collapse crypto change. The hedge fund initially filed a proof of declare value $120 million in opposition to FTX in July 2023 — including its identify to a protracted record of customers and traders in FTX who misplaced cash on account of its sudden insolvency.
In November 2024, 3AC’s liquidators amended their declare after discovering new proof suggesting that FTX had liquidated $1.53 billion in 3AC’s property simply two weeks earlier than the hedge fund commenced its personal liquidation proceedings two years prior. They argued that FTX’s liquidation of 3AC’s funds was carried out to fulfill a $1.3 billion legal responsibility to FTX, an obligation that 3AC claimed was not sufficiently substantiated.
FTX’s chapter stated the $1.3 billion legal responsibility represented collateral for a mortgage FTX made to 3AC, however the court docket dominated in favor of 3AC, discovering inadequate proof to help FTX’s mortgage declare.
The ruling permits 3AC to pursue a considerably bigger portion of FTX’s remaining property, doubtlessly reshaping creditor payouts.
FTX, which started distributing funds to collectors in February 2025, stated the expanded declare ought to have come sooner, arguing that it could burden different collectors and complicate its reorganization plan. The court docket, nonetheless, decided that 3AC’s delay was justified, provided that the liquidators solely uncovered the total extent of their declare in mid-2024 as a consequence of lacking monetary data from FTX and an absence of cooperation from 3AC’s founders, Zhu Su and Kyle Davies.
3AC, based in 2012, had grown into one of the crucial influential monetary corporations within the cryptocurrency trade by 2022. Its collapse was among the many first and largest dominoes to fall earlier than the broader crypto market imploded in 2022, which in the end set off the chain of occasions that exposed fraud in Sam Bankman-Fried’s crypto empire.
Bankman-Fried is at the moment pursuing an attraction of his legal conviction and 25-year jail sentence. Following the collapse of 3AC, Su was detained in Singapore and sentenced to 4 months in jail for failing to cooperate with 3AC’s liquidators. Davies didn’t face any prices linked to the hedge fund’s collapse.
The 3AC founders reunited in 2023 to launch a short-lived crypto change referred to as OPNX — designed to permit customers to commerce chapter claims of failed crypto corporations — which shut down in February.
With the court docket’s determination, 3AC’s liquidators now have a considerably bigger place within the FTX. chapter proceedings, elevating questions on how the expanded declare will impression distributions to different collectors. The ruling additionally underscores the dearth of transparency at each FTX and 3AC — additional complicating efforts to untangle each corporations’ property and obligations.
