The Delaware bankruptcy court handling the FTX estate approved a petition on Thursday from Three Arrows Capital (3AC) to significantly expand its claim against the estate from $120 million to $1.53 billion, marking a major development in the ongoing fallout from the collapse of Sam Bankman-Fried’s crypto empire.
3AC, once a dominant crypto hedge fund with over $3 billion in reported net assets, collapsed in 2022 while it still had deep financial ties to FTX, Sam Bankman-Fried’s soon-to-collapse crypto exchange. The hedge fund initially filed a proof of claim worth $120 million against FTX in July 2023 — adding its name to a long list of users and investors in FTX who lost money as a result of its sudden insolvency.
In November 2024, 3AC’s liquidators amended their claim after discovering new evidence suggesting that FTX had liquidated $1.53 billion in 3AC’s assets just two weeks before the hedge fund commenced its own liquidation proceedings two years prior. They argued that FTX’s liquidation of 3AC’s funds was carried out to satisfy a $1.3 billion liability to FTX, an obligation that 3AC claimed was not sufficiently substantiated.
FTX’s bankruptcy said the $1.3 billion liability represented collateral for a loan FTX made to 3AC, but the court ruled in favor of 3AC, finding insufficient evidence to support FTX’s loan claim.
The ruling allows 3AC to pursue a significantly larger portion of FTX’s remaining assets, potentially reshaping creditor payouts.
FTX, which began distributing funds to creditors in February 2025, said the expanded claim should have come sooner, arguing that it would burden other creditors and complicate its reorganization plan. The court, however, determined that 3AC’s delay was justified, given that the liquidators only uncovered the full extent of their claim in mid-2024 due to missing financial records from FTX and a lack of cooperation from 3AC’s founders, Zhu Su and Kyle Davies.
3AC, founded in 2012, had grown into one of the most influential financial firms in the cryptocurrency industry by 2022. Its collapse was among the first and largest dominoes to fall before the broader crypto market imploded in 2022, which ultimately set off the chain of events that revealed fraud in Sam Bankman-Fried’s crypto empire.
Bankman-Fried is currently pursuing an appeal of his criminal conviction and 25-year prison sentence. Following the collapse of 3AC, Su was detained in Singapore and sentenced to four months in prison for failing to cooperate with 3AC’s liquidators. Davies did not face any charges connected to the hedge fund’s collapse.
The 3AC founders reunited in 2023 to launch a short-lived crypto exchange called OPNX — designed to allow users to trade bankruptcy claims of failed crypto companies — which shut down in February.
With the court’s decision, 3AC’s liquidators now have a significantly larger position in the FTX. bankruptcy proceedings, raising questions about how the expanded claim will impact distributions to other creditors. The ruling also underscores the lack of transparency at both FTX and 3AC — further complicating efforts to untangle both firms’ assets and obligations.