US Bankruptcy Court Rules in Favor of Three Arrows Capital
A recent ruling by a US bankruptcy court has favored Three Arrows Capital (3AC), allowing the failed crypto hedge fund to increase its claim against the collapsed exchange FTX to a staggering $1.53 billion. This decision marks a significant increase from the initial $120 million claim that was sought by 3AC’s liquidators.
Legal Battle Unfolds
According to a court filing on March 13, 3AC’s liquidators initially filed a $120 million claim in June 2023, alleging that FTX had wrongfully seized assets prior to the hedge fund’s collapse. However, over a year later, they revised their claim, asserting that $1.53 billion worth of assets held by 3AC on the FTX platform were liquidated just before the commencement of the 3AC Liquidation to satisfy $1.3 billion in liabilities to FTX.
Court Ruling
Despite objections from FTX’s bankruptcy estate, Judge John T. Dorsey of the US Bankruptcy Court for the District of Delaware dismissed their concerns, citing a lack of sufficient evidence. The court also noted that 3AC’s original filing had hinted at the possibility of further legal action.
Judge Dorsey criticized FTX for hindering the liquidators’ efforts by limiting access to crucial information and individuals, making it challenging to assess financial losses promptly. He emphasized that the exchange’s lack of transparency impeded the reconstruction of a complete financial picture. The Judge stated:
“[FTX] gave the Liquidators only the raw data regarding the individual 3AC transactions on the FTX platform and restricted access to the individuals who might be able to help put the puzzle together. [Their] assertions now that the Liquidators should be penalized for failing to assemble the puzzle faster is not well taken.”
