FTX Trust Objects to $1.53 Billion Claim from Three Arrows Capital
On Friday, June 20, 2025, the FTX bankruptcy recovery trust filed an objection to a $1.53 billion claim made by Three Arrows Capital Ltd. (3AC), asserting that the claim is “illogical and baseless” and significantly overstates the actual value of assets linked to 3AC’s FTX accounts, providing no supporting evidence.
In a 94-page filing submitted to the Delaware bankruptcy court, the FTX trust contended that 3AC’s downfall in June 2022 stemmed from its own high-risk trading practices within the cryptocurrency market. The hedge fund had invested funds it did not possess, believing that crypto prices would rise. The trust accused the liquidators of 3AC of attempting to shift the financial burden of the hedge fund’s failed strategy onto other creditors of FTX.
The liquidators claimed that the hedge fund’s accounts allegedly held a positive balance of $1.59 billion on June 12, 2022, which subsequently declined. They argued this entitled them to recover that amount from FTX. However, the objection pointed out that the liquidators failed to clarify what happened to these “lost assets.”
The FTX trust highlighted that the actual value of assets associated with the 3AC accounts on June 12, 2022, was approximately $284 million, a figure inflated by over $1.2 billion in the liquidators’ claim. The trust emphasized that the losses in account value were solely due to market price declines and withdrawals made by 3AC, rather than any actions taken by FTX.
According to the filing, all trading and withdrawal activities in the 3AC accounts on June 13 and 14, 2022, were executed by the hedge fund itself until FTX initiated transactions to liquidate $82 million in digital assets for cash on June 14, which benefited 3AC, not FTX.
The trust explained that customer account balances on FTX were represented as a “single, comprehensive figure” that included all tradeable assets, such as cryptocurrencies and U.S. dollars. The liquidators were accused of attempting to inflate their claim by separating the sub-balance for fiat currency from that of digital assets. The trust pointed out that on June 12, 2022, the 3AC accounts had a negative USD balance and a positive digital asset balance.
The objection further explained that the movements of a customer’s account balance were affected by trades involving various assets. Customers could not withdraw assets without addressing any negative balances. The FTX trust argued that the comprehensive account balance, rather than isolated components, should determine claims in the bankruptcy proceedings.
Additionally, the filing noted that 3AC had participated in FTX’s margin trading program, borrowing $120 million from other exchange customers to purchase digital assets. However, as the value of cryptocurrencies fell in early June 2022, 3AC’s account balance dropped significantly due to market declines and its own withdrawals, not due to FTX’s actions..
The FTX trust described the liquidators’ choice of June 12, 2022, as an “arbitrary starting point,” asserting that the decline in the 3AC accounts over the following days was unrelated to FTX. The trust also pointed out that 3AC had breached its agreements with FTX by allowing its account balance to fall below $240 million.
In conclusion, the FTX trust argued that the facts and logic undermine any legitimate claim that the joint liquidators might have against FTX. They asserted that the liquidators’ attempt to extract value from the bankruptcy estate at the expense of legitimate creditors is misguided. The trust characterized the proof of claim as speculative and lacking sufficient factual or legal support.
FTX, which filed for Chapter 11 protection following its collapse, had approximately $16.5 billion in assets available for distribution to creditors by the time its bankruptcy plan was confirmed in October 2024.
Please contact BlockTribune for access to a copy of this filing.
