The FTX Bankruptcy Recovery Trust officially filed a strong objection on Friday to a $1.53 billion claim made by the now-liquidated cryptocurrency hedge fund, Three Arrows Capital Ltd. (3AC). The Trust labeled the claim as “illogical and baseless,” arguing it significantly overstates the actual value of assets linked to 3AC’s FTX customer accounts and lacks any supporting evidence.

In a detailed 94-page filing submitted to the U.S. Bankruptcy Court for the District of Delaware, the FTX Trust outlined that Three Arrows Capital’s collapse in June 2022 resulted from its own high-risk trading and reckless use of funds. The Trust criticized 3AC’s liquidators for attempting to shift responsibility for their failed strategy onto other FTX creditors.

The objection highlights that while the 3AC liquidators claim a $1.59 billion positive account balance on June 12, 2022, the actual value of assets was approximately $284 million. The Trust explains that the alleged losses stemmed from market price declines and 3AC’s own withdrawals — not from any actions taken by FTX.

Furthermore, the Trust emphasized that the FTX customer account balances represent a single comprehensive figure, combining all tradeable assets, including cryptocurrencies and U.S. dollars. The 3AC liquidators, however, are accused of selectively isolating USD sub-balances to artificially inflate their claim, despite the 3AC accounts showing a negative USD balance on the referenced date.

“The joint liquidators ask this court to treat 3AC accounts unlike any other customer account in a manner that defies logic,” the Trust said.

The objection also revealed that 3AC participated in FTX’s margin trading program, utilizing a $120 million credit line borrowed from other exchange customers. As cryptocurrency prices dropped in early June 2022, 3AC’s account balance declined accordingly.

According to the Trust, 3AC’s claim ignores the fact that it breached agreements with FTX by allowing its account balance to fall below agreed limits.

“The facts, the law, and logic undercut any plausible argument that the joint liquidators have any claim against FTX, never mind any fraction of $1.53 billion,” the Trust concluded. “The proof of claim is a jumble of baseless, speculative and unsupported claims.”

FTX filed for Chapter 11 bankruptcy following a catastrophic collapse that scattered billions in digital assets. At the time its bankruptcy plan was confirmed in October 2024, FTX held approximately $16.5 billion in assets for distribution to creditors.

The FTX Recovery Trust continues to pursue efforts to recover assets improperly transferred prior to the bankruptcy filing.

For more information, please contact the FTX Recovery Trust legal representatives at Landis Rath & Cobb LLP and Sullivan & Cromwell LLP.