Bankrupt crypto trade FTX has stated it mustn’t should pay an enormous $1.53 billion restoration declare by Three Arrows Capital, arguing in a current court docket submitting that the crypto hedge fund’s “personal dangerous [trading] technique precipitated its collapse, and its personal account exercise — not any motion by [FTX] — resulted in a big decline within the “worth” related to the 3AC Accounts in June 2022.”
“3AC wager large that cryptocurrency costs would enhance utilizing money it didn’t have and, when costs as a substitute plummeted, 3AC proceeded to liquidate the dangerous bets it had positioned and withdraw property from [FTX],” FTX’s legal professionals wrote within the submitting.
The Delaware court docket overseeing FTX’s chapter gave 3AC’s liquidators permission to develop their declare earlier this yr, bumping it up considerably from their authentic declare of $120 million. This got here after 3AC’s legal professionals allegedly found new proof suggesting that FTX had liquidated $1.53 billion of 3AC’s property two weeks earlier than the hedge fund began its personal liquidation proceedings in June 2022. FTX’s legal professionals say the liquidation of 3AC’s property on its platform was carried out to fulfill a mortgage to FTX — however 3AC’s legal professionals pushed again, arguing that the mortgage to FTX wasn’t sufficiently documented or in any other case substantiated. The chapter court docket sided with 3AC, discovering inadequate proof to assist FTX’s declare of a mortgage.
In the latest submitting, legal professionals for FTX’s property stated that on June 12, 2022 the precise worth of property in 3AC’s accounts was solely $284 million — $1.017 billion in digital property and unfavourable $733 million in US {dollars}. Additionally they added that the “first and solely” liquidation of 3AC’s property ordered by FTX was on June 14, 2022, and swapped $82 million in crypto for money — a transfer they argued “truly benefitted 3AC (not FTX).”
“The Joint Liquidators grossly inflate the precise $284 million worth of property related to the 3AC Accounts on June 12, 2022 by greater than $1.2 billion, they usually ignore that the whole loss in account worth resulted from market value declines and 3AC’s personal withdrawals, not any motion taken by FTX,” the bankrupt trade’s legal professionals wrote.
“The Joint Liquidators ask this Court docket to drive different Trade prospects and collectors to foot the invoice for 3AC’s failed technique by asserting illogical and baseless claims for $1.53 billion…
FTX, which was at one time one of many largest crypto exchanges on the planet, filed for chapter safety shortly after its collapse in November 2022. The trade’s restoration belief began distributing $5 billion to FTX collectors in Might.
3AC collapsed in June 2022, one month after the collapse of the Terra/LUNA ecosystem, beginning a domino-like collapse of main crypto corporations together with Voyager, Celsius, BlockFi and Genesis.
3AC has till July 11 to file an objection earlier than the listening to set for August 12.
