FTX Estate Challenges 3AC’s $1.53 Billion Claim

FTX’s bankruptcy lawyers contested Three Arrows Capital’s $1.53 billion claim in a Delaware court, arguing it’s unsupported. FTX claimed the misrepresentation in asset valuation prior to both firms’ bankruptcy proceedings.

The dispute highlights FTX’s challenge to 3AC’s asset claims, considering recovery rates for creditors. It underlines ongoing legal battles over valuation and accountability in cryptocurrency bankruptcies.

FTX’s bankruptcy estate, managed by legal representatives, objected to 3AC’s claim, considering it “unreasonable and unsupportable.” Three Arrows Capital claims that FTX liquidated their assets prior to collapse. The controversy involves claims over assets valued at $1.6 billion.

The evidence suggests that the delay in filing the Amended Proof of Claim was, in large part, caused by the Debtors themselves. The evidence also suggests that the Liquidators were diligent … despite having the complete information in their possession, the Debtors repeatedly delayed giving it to them.

Chief Judge John Dorsey, US Bankruptcy Court for the District of Delaware, said, “The evidence suggests that the delay in filing the Amended Proof of Claim was, in large part, caused by the Debtors themselves. The evidence also suggests that the Liquidators were diligent … despite having the complete information in their possession, the Debtors repeatedly delayed giving it to them.”

Chief Judge John Dorsey permitted 3AC’s claim pursuit but highlighted FTX’s delays in record sharing. FTX insists 3AC owed margin debt, while 3AC alleges FTX liquidated assets unfairly. Both parties are embroiled in a complex legal and financial dispute.

Legal challenges involve market and creditor stakeholders, though no direct market shifts were seen. The broader crypto community is skeptical of the claim’s scale, considering 3AC’s leveraged losses. This case might set precedents for handling leveraged accounts in future insolvencies.

The bankruptcy case adds to a history of crypto finance disputes, with the resolution potentially influencing FTX creditor outcomes. Potential changes in asset recovery procedures could lead to regulatory and technological shifts, impacting the cryptocurrency industry. The absence of public statements by key parties adds to the uncertainty surrounding the final judgment.

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