Three Arrows Capital Liquidators Seek to Claw Back $1.53B From Bankrupt FTX

The liquidators of Three Arrows Capital (3AC) are now seeking to claw back more funds as defunct cryptocurrency exchange FTX and its sister investment firm Alameda Research prepares to distribute up to $16 billion worth of funds to creditors.

A few weeks before its collapse, FTX liquidated $1.33 billion of Three Arrows Capital’s (3AC) funds to settle the collateral of a loan. Now, 3AC liquidators are seeking to claw back more funds from FTX as it prepares to distribute up to $16 billion to creditors.

Key Takeaways

Three Arrows Capital (3AC) liquidators are now seeking to increase their bankruptcy claims against FTX to $1.53 billion from the initial $120 million. This move comes as FTX and its sister investment firm Alameda prepare to distribute up to $16 billion to creditors.

According to a Bloomberg report, 3AC liquidators, Russell Crumpler and Christopher Farmer of Teneo BVI, are arguing that the exchange liquidated, sold, or moved the assets just two weeks after its collapse, which was triggered by the Terra Luna implosion.

The 3AC liquidators are highlighting that FTX breached the contract and trust agreement, thus the transaction ought to be invalidated. However, FTX claims that an unidentified individual representing 3AC confirmed the liquidation of the collateral assets.

The motion by 3AC liquidators will be heard on November 20, when the representatives of the two firms will avail themselves of the court.

Earlier this year, 3AC filed a $1.3 billion claim against the distressed Terra Luna, with the liquidators arguing that the crypto hedge fund was misled by the DeFi project.

The creditors of 3AC have been eyeing the assets of the hedge fund’s co-founders to be liquidated and distributed among the affected investors. Moreover, the co-founders of 3AC did not provide the creditors with the necessary information to make a proper decision before making the investments.

Last year, a British Virgin Islands court ordered the authorities to freeze assets belonging to 3AC co-founders including Su Zhu, who spent three months in prison.

In August, the liquidators of Three Arrows Capital filed a 3,000-page document, detailing the hedge fund’s massive crypto losses and revealing the counterparties involved. Notably, the creditors are owed over $3.5 billion by 3AC.