ChainTech Africa

June 23, 2025
Bankrupt crypto exchange FTX has forcefully rejected a massive $1.53 billion claim filed by collapsed hedge fund Three Arrows Capital (3AC), calling it “baseless” and asserting that the defunct fund is entitled to nothing from the FTX estate.

In a court filing submitted Tuesday to the U.S. Bankruptcy Court for the District of Delaware, FTX’s legal team described 3AC’s claim as “legally and factually unsupported,” accusing the fund’s co-founders, Su Zhu and Kyle Davies, of seeking recovery under “false pretenses” while they themselves owe significant sums to the FTX estate.

The Battle of the Bankrupts

The legal dispute brings together two of the highest-profile collapses of the 2022–2023 crypto credit crisis: FTX, once led by Sam Bankman-Fried and now under restructuring, and 3AC, the Singapore-based hedge fund that imploded under leveraged bets on Terra, Grayscale, and other volatile assets.

In its filing, 3AC’s liquidators claimed that FTX entities—including Alameda Research—had improperly seized and liquidated over $1 billion in assets belonging to the hedge fund during its wind-down, arguing that those funds should now be returned in full, plus damages and interest.

But FTX’s restructuring team has taken a sharply different view.

“Three Arrows Capital is not a victim of FTX—it was an active participant in the same reckless, uncollateralized lending culture that led to widespread contagion,” the filing reads. “FTX owes 3AC nothing.”

FTX: 3AC Still Owes Us

FTX also alleges that 3AC owes at least $300 million in net obligations to Alameda Research, citing margin loans and derivatives trades that 3AC allegedly failed to honor during its collapse in mid-2022. The exchange’s attorneys argue that any 3AC claims should be subordinated or disallowed outright, given the hedge fund’s own misconduct and outstanding liabilities.

The estate also pointed to public statements and blockchain evidence suggesting that 3AC was closely entangled with the very types of high-risk trading that regulators and forensic auditors now blame for the broader collapse in centralized crypto finance.

Legal observers note that the confrontation could impact creditor recoveries for both estates, as they wrestle over overlapping claims involving billions in customer and institutional assets.

Clashing Reputations and Legal Strategies

The rhetoric in the filing reflects growing tension between the liquidators of bankrupt firms that are competing for whatever assets remain in the crypto ecosystem. Both FTX and 3AC are now overseen by court-appointed administrators attempting to claw back value for creditors, but their competing narratives complicate settlement possibilities.

Su Zhu and Kyle Davies—who were arrested and later released on bail in late 2023—have largely remained out of the public eye. Their firm’s claim against FTX, however, marks a bold effort to reframe 3AC’s downfall as at least partially caused by predatory behavior from larger counterparties like Alameda.

FTX’s response seeks to shut that door decisively.

“3AC’s reckless trading and gross mismanagement were self-inflicted wounds,” FTX’s lawyers argued. “The estate will vigorously contest any attempt to extract funds that rightfully belong to FTX creditors.”

What Comes Next

The judge overseeing FTX’s Chapter 11 case is expected to hold hearings later this summer on the validity of various large claims filed against the estate, including those from 3AC and Voyager Digital. FTX, which has reportedly recovered over $13 billion in assets, is aiming to return most customer funds by mid-2026, subject to ongoing asset sales and legal outcomes.

As the case unfolds, the FTX–3AC showdown highlights a deeper reckoning within crypto’s post-crisis landscape: even among the wreckage, a war over who owes what to whom continues to reshape the industry’s future.