3AC wins court docket approval to develop FTX chapter declare from $120 million to $1.5 billion

Key Takeaways

3AC’s liquidators elevated their chapter declare in opposition to FTX to $1.53 billion.
The court docket accepted the expanded declare involving breach of contract and unjust enrichment.

Three Arrows Capital’s (3AC) liquidators gained approval to extend their chapter declare in opposition to FTX from $120 million to $1.5 billion, based on a court docket submitting shared at this time by Michael Bottjer, co-founder of FTXCreditor, an entity targeted on offering liquidity options for collectors affected by FTX chapter.

Russell Crumpler and Christopher Farmer, appointed to handle the liquidation of 3AC within the British Virgin Islands (BVI), initially filed a proof of declare (POC) for $120 million, geared toward recovering property which will have been improperly transferred earlier than 3AC declared chapter.

Nonetheless, after additional investigation and discovery, they uncovered new proof indicating that 3AC had roughly $1.5 billion in property on the FTX trade as of June 12, 2022. Practically all of those property have been liquidated between June 12 and June 14, 2022, to fulfill a $1.3 billion legal responsibility to FTX.

These findings led to the liquidators’ movement to amend the POC to extend the declare quantity from $120 million to $1.5 billion

FTX’s debtors opposed the modification, arguing it lacked correct discover and was filed too late. Nonetheless, the court docket decided the unique declare supplied enough discover, as each claims associated to the identical core occasion – the liquidation of 3AC’s FTX account between June 12 and 14, 2022.

The choose famous that FTX’s debtors possessed related monetary info however withheld it from 3AC’s liquidators, contributing to submitting delays. Whereas FTX argued the elevated declare would disrupt its reorganization plan, the court docket discovered no concrete proof supporting this assertion.

In the end, the court docket dominated in favor of 3AC, permitting the $1.5 billion amended POC to proceed.

Aside from FTX, 3AC’s liquidators additionally sought a $1.3 billion declare in opposition to Terraform Labs. The submitting was lodged with the US Chapter Courtroom for the District of Delaware final August.

The liquidators allege that Terraform Labs misled 3AC concerning the stability of TerraUSD (UST) and Luna (LUNA), artificially inflating their costs by market manipulation. This led 3AC to speculate closely in these tokens, leading to main monetary losses when the Terra ecosystem collapsed in Might 2022.

Terraform Labs’ co-founder, Do Kwon, is going through a number of federal fraud costs associated to the collapse of UST and LUNA. His trial is scheduled to start on January 26, 2026.