FTX Lawyers Demand Dismissal of Illogical $1.53 Billion Lawsuit from 3AC

Lawyers involved in the bankruptcy proceedings of the cryptocurrency exchange FTX have contested a $1.53 billion claim from the now-liquidated hedge fund Three Arrows Capital (3AC), arguing that the demands are unfounded. They state that the claims are based on «inaccurate figures» and do not account for «actual events that transpired.»

According to the legal team, 3AC’s extensive spot and margin trading, partially funded by a $120 million credit line from FTX, led to the firm’s downfall, independent of any actions taken by the exchange. Nonetheless, they acknowledged a forced liquidation amounting to $82 million as stipulated in the contract.

The objection highlights that 3AC breached its agreements with FTX in June 2022, following the collapse of Terra the previous month, which triggered a sell-off in the cryptocurrency market and caused the hedge fund’s balance to drop below the required threshold of $240 million.

«3AC neglected FTX’s inquiry regarding the violation for over six hours and instead of providing assets, actually withdrew $18 million in ETH,» the lawyers noted, referencing internal Slack and Telegram logs.

From FTX’s perspective, the liquidation of the hedge fund’s account and the sale of assets worth $82 million preserved value rather than diminished it.

Attached to the document is a statement from Steven P. Koverik, a managing director at Alvarez & Marsal, asserting that the liquidation was «justified and necessary,» preventing inevitable losses. Additionally, FTX’s objection is supported by the opinion of British Virgin Islands legal advisor Steven Atherton, who expressed doubts about the validity of 3AC’s legal theories in that jurisdiction.

«[3AC seeks] to gain from the debtors’ assets at the expense of legitimate creditors to salvage its own failed liquidation efforts. However, FTX’s creditors should not and cannot bear the brunt of the hedge fund’s unsuccessful trading strategy,» the lawyers concluded.

3AC must submit a response by July 11, and a hearing on the case without the presentation of evidence is currently scheduled for August 12.

It’s worth noting that 3AC had previously increased its claim from $120 million to $1.53 billion in November 2024, following «the discovery of new evidence» regarding the liquidation of its assets by FTX.

In March 2025, the heightened claims against the exchange’s bankruptcy estate were approved by a Delaware bankruptcy judge.