3AC Liquidators Seek to Boost FTX Claim to $1.53 Billion from $120 Million

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Ruholamin Haqshanas

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Ruholamin Haqshanas

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Ruholamin Haqshanas is a contributing crypto writer for CryptoNews. He is a crypto and finance journalist with over four years of experience. Ruholamin has been featured in several high-profile crypto...

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November 14, 2024

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Liquidators for the now-bankrupt crypto hedge fund Three Arrows Capital (3AC) are seeking a court’s approval to raise their claim against FTX from $120 million to a staggering $1.53 billion.

The move stems from allegations that, just two weeks before 3AC’s collapse, FTX liquidated and seized $1.33 billion worth of the hedge fund’s assets to settle debts, according to a report from Bloomberg.

The liquidators claim the transactions were “avoidable and unfair,” asserting that the abrupt liquidation harmed 3AC’s creditors.

3AC Claims FTX Undervalued Seized Assets

The fund further alleges FTX undervalued the seized assets and breached trust, contract, and fiduciary obligations.

Additionally, 3AC has accused FTX of withholding critical information, leaving the liquidators to analyze raw data before confirming the extent of the losses in August.

In response, FTX claimed that an unidentified individual associated with 3AC initiated the liquidations. However, FTX has yet to verify the identity of this person.

The case will see its next major development on November 20, when the court is scheduled to review 3AC’s motion to amend its claim.

The legal battle is one of many involving 3AC, which has been pursuing claims against other collapsed crypto firms.

In August, 3AC’s liquidators filed a $1.3 billion claim against Terraform Labs, the company behind the failed TerraUSD (UST) stablecoin and its sister token, Luna (LUNA).

The claim, filed in a Delaware bankruptcy court, accuses Terraform of misleading 3AC about the stability of its ecosystem, resulting in inflated token values and significant 3AC investments.

The liquidators are seeking damages related to UST and LUNA’s collapse.

FTX, itself embroiled in bankruptcy proceedings, has ramped up recovery efforts.

The exchange’s bankruptcy estate recently filed a $100 million lawsuit against SkyBridge Capital and its founder Anthony Scaramucci, aiming to recover funds linked to investments by FTX’s former CEO, Sam Bankman-Fried.

FTX Files Lawsuit Against CZ

In separate lawsuits, FTX is pursuing claims against Binance’s former CEO Changpeng Zhao, alleging a fraudulent $1.75 billion repurchase deal, and Waves founder Aleksandr Ivanov, seeking $90 million in crypto assets.

In a filing earlier this week, FTX claimed that Binance engaged in fraudulent actions that damaged its financial standing and credibility.

The lawsuit said that Binance, former CEO Changpeng “CZ” Zhao, and other executives received at least $1.76 billion in crypto through a fraudulent transfer from FTX.

The transaction was a 2021 share purchase agreement that Binance made with FTX, which the latter now claims was fraudulent due to its insolvency at the time.

According to legal documents, Bankman-Fried funded the repurchase using a mix of FTX’s token, FTT, and Binance’s BNB and BUSD valued at $1.76 billion.

Alameda allegedly used about $1 billion in customer deposits from FTX for the transaction despite knowing it lacked sufficient liquidity or resources.

FTX also accused Zhao of deliberately undermining its operations by spreading false statements.

These actions, it claims, triggered a bank run and blocked FTX from securing alternative financing.