Three Arrows Capital Liquidators Increase Bankruptcy Claims Against FTX to $1.53 Billion
FTX and Alameda Research are preparing to distribute up to $16 billion to creditors, while Three Arrows Capital (3AC) liquidators seek to recover funds. According to a report by Bloomberg, 3AC liquidators Russell Crumpler and Christopher Farmer have increased their bankruptcy claims against FTX from $120 million to $1.53 billion.
The liquidators argue that FTX unfairly liquidated or moved assets shortly after its collapse, which followed the Terra Luna crisis. Notably, FTX seized $1.33 billion from 3AC to settle loan collateral, which the liquidators claim was unjustified.
The liquidators assert that FTX breached contractual agreements, warranting the invalidation of the transaction. FTX contends that an unidentified representative from 3AC confirmed the liquidation.
A court hearing regarding the motion by 3AC liquidators is scheduled for November 20.
Cash Distress at Three Arrows Capital
Three Arrows Capital owes over $3.5 billion to creditors, primarily due to losses from the Terra Luna IST collapse in early 2022. In August, 3AC liquidators filed a $1.3 billion claim against Terra Luna.
Crumpler and Farmer believe Terra Luna provided misleading financial statements, particularly concerning its algorithmic stablecoin, which has not recovered. Creditors are looking to liquidate assets belonging to 3AC co-founders for distribution among affected investors. The co-founders failed to provide necessary information for informed investment decisions.
A British Virgin Islands court previously ordered the freezing of assets belonging to 3AC co-founders, including Su Zhu, who served three months in prison.
Bigger Picture
The collapse of several crypto companies post-2021 bull market has prompted global regulators to reassess the Web3 industry. Many Web3 companies are now complying with regulations to facilitate mainstream adoption.
For instance, DeFi projects targeting Europe must adhere to Markets in Crypto-Assets (MiCA) regulations. All DeFi protocols face complex regulatory frameworks across jurisdictions to prevent closure.
However, risks remain in the Web3 space, including sophisticated attacks. WazirX users continue to experience losses following a hack that resulted in over $230 million being stolen.