The liquidators of Three Arrows Capital (3AC) are now pursuing claims against FTX as part of their ongoing efforts to recover assets for the bankrupt crypto hedge fund. According to recent filings, the liquidators allege that FTX played a significant role in 3AC’s financial collapse, and they are now seeking to recover funds from the exchange. The legal action comes amid a broader investigation into the events that led to 3AC’s liquidation, with the liquidators targeting entities that may have contributed to or enabled the hedge fund’s downfall.
3AC, once one of the largest and most influential crypto hedge funds, filed for bankruptcy in July 2022 after it suffered heavy losses during the market downturn. The fund’s failure sent shockwaves through the crypto industry, exposing vulnerabilities in the DeFi and trading sectors. FTX, which had been involved in lending funds to 3AC, is now facing scrutiny over its role in the collapse. The liquidators argue that FTX’s actions contributed to the fund’s insolvency, prompting the pursuit of claims against the exchange for potential damages.
The legal move highlights the growing number of interconnected bankruptcies and legal disputes within the crypto sector, following the collapse of high-profile entities like 3AC and FTX. FTX itself filed for bankruptcy in November 2022, with founder Sam Bankman-Fried facing charges related to the exchange’s alleged mismanagement and fraud. The investigation into 3AC’s collapse and its links to FTX could further complicate the ongoing legal proceedings for both parties, as creditors and regulators look for accountability in the wake of the massive failures.
As the liquidators continue their recovery efforts, the outcome of this legal action could have broader implications for the crypto industry, particularly for firms involved in high-risk lending and trading practices. With the collapse of 3AC and FTX serving as stark reminders of the need for better risk management and transparency, the legal battles surrounding their bankruptcies are likely to shape the future regulatory landscape of the cryptocurrency market.
