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A US bankruptcy court has authorized liquidators of defunct crypto hedge fund Three Arrows Capital (3AC) to increase their claim against collapsed crypto exchange FTX from $120 million to $1.53 billion.

Chief Judge John Dorsey rejected FTX’s debtors’ argument that the amended proof of claim (POC) from 3AC liquidators was untimely and an unjust attempt to slow the bankruptcy proceedings.

In a March 13 ruling in the US Bankruptcy Court for the District of Delaware, Dorsey opined that 3AC liquidators had provided sufficient notice of their claim and the possibility of amending it once they had analyzed all the available information. Any delay, he said, was caused by FTX’s failure to share relevant records promptly.

Chief Judge John Dorsey has granted the motion by liquidators for defunct hedge fund Three Arrows Capital to increase their claim against FTX to $1.53 billion. Source:

“The evidence suggests that the delay in filing the Amended Proof of Claim was, in large part, caused by the Debtors themselves,” Dorsey said.

“The evidence also suggests that the Liquidators were diligent in attempting to obtain the information and that despite having the complete information in their possession, the Debtors repeatedly delayed giving it to them.”

3AC liquidators initially filed a $120 million claim in FTX’s bankruptcy case in June 2023. They later expanded it in November 2024, alleging claims including breach of contract, unjust enrichment, and breach of fiduciary duty.

The liquidators alleged FTX held $1.53 billion in the hedge fund assets that were liquidated to settle $1.33 billion in liabilities in 2022.

They argued that the transactions were avoidable, caused harm to 3AC creditors and that FTX debtors had delayed providing the information that would have uncovered the liquidation.

FTX debtors objected to the amended claim, saying that the original POC was insufficient to inform them about the nature and amount 3AC liquidators would be claiming and that it came too late and should be disallowed.

Related: FTX filed for bankruptcy 2 years ago — What’s happening now?

Before its collapse in June 2022, Three Arrows Capital was once one of the industry’s largest crypto hedge funds, with over $3 billion in assets.

Its liquidators also pursued claims against collapsed crypto firm Terraform Labs through a $1.3 billion claim in Terra’s bankruptcy case.

At the same time, FTX, which filed for bankruptcy in November 2022, has been undertaking its own recovery efforts to reclaim funds.

In November last year, it filed a trio of lawsuits, one against SkyBridge Capital and its founder, Anthony Scaramucci, to recoup funds spent by former FTX CEO Sam “SBF” Bankman-Fried on sponsorship and investment deals. 

Another suit was filed against crypto exchange Binance and its former CEO, Changpeng Zhao, to recover $1.76 billion worth of cryptocurrency sent to the exchange as part of a July 2021 repurchase deal.

Waves founder Aleksandr Ivanov is also in the crosshairs for $80 million worth of crypto sent to the Waves-based decentralized liquidity protocol by Alameda Research in 2022.

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