3AC’s Liquidators Score Huge Win in FTX Legal Battle
In a significant development, the United States Bankruptcy Court for the District of Delaware greenlit a motion allowing the joint liquidators of Three Arrows Capital (3AC) to revise their original proof of claim in the FTX bankruptcy proceedings. This adjustment sees their claims skyrocket from $120 million to a whopping $1.53 billion.
The updated filing has bolstered 3AC’s accusations against FTX, encompassing claims of breach of contract, breach of fiduciary duty, unjust enrichment, and proprietary restitutionary claims.
The court ruling follows a motion set in motion by 3AC’s liquidators, Russell Crumpler and Christopher Farmer. Notably, the liquidators first lodged their proof of claim back in June 2023, aiming to recover funds tied to a purported $120 million loan owed by 3AC to FTX. However, upon deeper scrutiny, the liquidators unearthed a more intricate web of interactions between 3AC and FTX.
According to insider information, just prior to the commencement of the 3AC liquidation, assets worth $1.53 billion held by 3AC on the FTX platform were liquidated to offset $1.3 billion in liabilities to FTX.
Despite facing hurdles during their investigation, including a paucity of essential records and limited cooperation from 3AC’s founders, Kyle Davies and Su Zhu, the liquidators persevered. Key information crucial to unraveling the transactional landscape between 3AC and FTX only surfaced towards the end of 2023 and the beginning of 2024, post-FTX’s bankruptcy filing in November 2022.
FTX contested the motion, arguing against the tardiness of the amendment and the broadening of claims’ scope. Nonetheless, the court brushed aside FTX’s objections, favoring 3AC’s liquidators and authorizing the expanded claim. The court underscored that FTX’s slackness in furnishing vital documents promptly contributed significantly to the delays in amending the claim.
With this latest legal triumph, the spotlight shifts to Sam Bankman-Fried’s pursuits to secure a presidential pardon from Donald Trump. Bankman-Fried has strategically ingratiated himself with right-wing figures, like appearing on Tucker Carlson’s show and seeking counsel from a Trump-affiliated attorney. While pardons have been a part of Trump’s legacy, skepticism looms over SBF’s rapport within the crypto community.
The evolving narrative in the FTX saga underscores the dynamic nature of crypto market entanglements and legal battles, encapsulating the intrigue and complexities of high-stakes financial proceedings.