Three Arrows Capital Scores $1.53 Billion Win Over FTX in Bankruptcy Showdown

A Courtroom Clash Rooted in Crypto’s Dark Days

The roots of this dispute trace back to June 2022, when 3AC imploded amid a brutal crypto bear market, filing for bankruptcy with liabilities exceeding $3 billion. The fund, co-founded by Su Zhu and Kyle Davies, had been a titan in the industry, managing billions in assets before its leveraged bets unraveled. Weeks later, FTX, led by Sam Bankman-Fried, followed suit, collapsing in November 2022 after revelations of mismanagement and alleged fraud sent shockwaves through the market.

Both failures wiped out billions in investor value, leaving a tangled web of claims and counterclaims.

At the heart of the current fight is 3AC’s assertion that FTX owes it $1.53 billion, tied to transactions and investments made before both firms’ demise. FTX’s bankruptcy estate, now under the stewardship of John J. Ray III, argued the claim was inflated and lacked sufficient documentation. Judge Dorsey disagreed, ruling that 3AC’s evidence, including transaction records and correspondence, met the threshold for approval.

Why $1.53 Billion Matters

FTX’s estate, tasked with repaying creditors and defrauded customers, is already stretched thin. Estimates from late 2024 pegged its recoverable assets at around $13 billion, a fraction of the $32 billion in claims filed against it.

3AC’s newly approved claim vaults it near the top of the creditor pecking order, pitting it against retail investors, institutional players, and even regulators vying for a slice of the pie.

The decision also reignites debates about accountability in crypto’s Wild West era, where high-stakes gambles often left smaller players holding the bag. Retail users, who filed claims averaging $10,000-$50,000, may see smaller recoveries as large players like 3AC gain ground. The estate’s $13 billion pot, dwarfed by total claims, means every approved dollar matters.

A Ripple Effect Across the Industry

Crypto markets in 2025 are riding a wave of optimism, with Bitcoin topping $80,000 and a pro-crypto Trump administration easing regulatory fears. Yet, the 3AC-FTX saga is a stark reminder of unresolved wounds.

Other creditors, including Genesis Global Capital, which settled with FTX for $175 million last year, may now push to revise their claims, further complicating the payout timeline.

The decision has broader implications, beyond the courtroom. Hedge funds and trading firms burned by 2022’s contagion are watching closely, hoping to claw back losses from FTX’s carcass.

The Ghosts of 2022 Haunt 2025

For 3AC, this win is a lifeline. Once vilified for its role in the crypto crash – Su Zhu was briefly jailed in Singapore in 2023 for non-cooperation – the fund is now positioning itself as a victim of FTX’s collapse. Its founders have claimed FTX’s failure exacerbated their own, pointing to frozen assets and unfulfilled trades. Critics, however, see hypocrisy.

Analysts expect FTX to appeal, though no official statement has confirmed this. Past crypto bankruptcies – like Celsius, which began distributions in 2024 – suggest appeals could push resolutions into late 2025 or beyond.

Final Thoughts

The 3AC-FTX showdown is just one thread in a larger tapestry of crypto bankruptcies. Celsius Network, another 2022 casualty, recently won court approval to distribute $2.5 billion to creditors, while Voyager Digital’s estate battles linger.

Each case underscores a painful truth: the crypto boom of the early 2020s left a wreckage that’s still being sorted out. For the average investor, stakes are personal (with millions caught in the crossfire), from Miami retirees to London traders.