In a recent development in the aftermath of the collapse of Sam Bankman-Fried’s crypto empire, the Delaware bankruptcy court has approved Three Arrows Capital (3AC) to significantly expand its claim against FTX. This decision, allowing 3AC to increase its claim from $120 million to $1.53 billion, has major implications for the ongoing creditor battle surrounding the FTX estate.
Three Arrows Capital, a once-prominent crypto hedge fund with over $3 billion in reported net assets, faced financial turmoil in 2022 while maintaining deep ties to FTX. Initially filing a proof of claim worth $120 million against FTX in July 2023, 3AC joined a long list of users and investors who suffered losses due to FTX’s sudden insolvency.
In a significant turn of events, 3AC’s liquidators amended their claim in November 2024 after uncovering new evidence. This evidence suggested that FTX had liquidated $1.53 billion in 3AC’s assets just two weeks before the hedge fund began its own liquidation proceedings. The liquidators argued that this liquidation was conducted to cover a $1.3 billion liability to FTX, a claim that they believed lacked sufficient substantiation.
FTX claimed that the $1.3 billion liability was collateral for a loan extended to 3AC. However, the court ruled in favor of 3AC, citing insufficient evidence to support FTX’s loan claim. This ruling now permits 3AC to pursue a larger portion of FTX’s remaining assets, potentially altering the landscape of creditor payouts in the process.
As FTX began distributing funds to creditors in February 2025, the expanded claim by 3AC raised concerns about its timing. FTX argued that the delayed claim would burden other creditors and complicate the company’s reorganization plan. Nonetheless, the court deemed 3AC’s delay justified, given the circumstances surrounding the discovery of the new evidence.
Founded in 2012, 3AC was a significant player in the cryptocurrency industry until its collapse in 2022. This event preceded the broader market crash and revealed fraudulent activities within Sam Bankman-Fried’s empire. Bankman-Fried is currently appealing a criminal conviction and a 25-year prison sentence, while 3AC’s founders, Zhu Su and Kyle Davies, faced their own legal troubles in the aftermath of the hedge fund’s collapse.
The 3AC founders briefly reunited in 2023 to launch a crypto exchange called OPNX, which allowed users to trade bankruptcy claims of failed crypto companies. However, the exchange shut down in February. With the recent court decision, 3AC’s liquidators now hold a significant position in the FTX bankruptcy proceedings, posing questions about the impact on other creditors’ distributions and highlighting the lack of transparency within both FTX and 3AC.
Sam Kessler, CoinDesk’s deputy managing editor for tech and protocols, provided valuable insights into the unfolding events. His expertise in decentralized technology, infrastructure, and governance sheds light on the complexities of the situation. Having won a 2023 Gerald Loeb Award for CoinDesk’s coverage of Sam Bankman-Fried and the FTX collapse, Kessler’s contributions offer a deeper understanding of the ongoing legal battles in the cryptocurrency world.
