Newly revealed court docket paperwork present that FTX secretly liquidated $1.53 billion in Three Arrows Capital (3AC) belongings simply two weeks earlier than the hedge fund collapsed in 2022. The disclosure challenged earlier narratives that 3AC’s downfall was solely market-driven.
As soon as valued at over $10 billion, 3AC collapsed in mid-2022 after a sequence of leveraged directional trades turned bitter. The hedge fund had borrowed from over 20 massive establishments earlier than the Might 2022 crypto crash, which noticed Bitcoin (BTC) fall to $16,000.
Nevertheless, recently-discovered proof exhibits that the FTX alternate liquidated $1.53 billion value of 3AC’s belongings simply two weeks forward of the hedge fund’s collapse.
3AC “requested a chapter court docket to let it improve its declare towards FTX from $120 million to $1.53 billion,” according to “Mbottjer,” the pseudonymous co-founder of FTX Creditor, a bunch FTX collectors and chapter declare patrons.
“3AC says it solely lately found proof that FTX liquidated $1.53B of 3AC’s belongings simply two weeks earlier than 3AC itself went into liquidation, far more than the $120M initially claimed,” they said.
Supply: Mbottjer
The crypto hedge fund claims it was by no means notified of those liquidations on account of FTX’s personal chapter proceedings. A court docket dominated that 3AC acted in good religion, permitting it to pursue its full $1.53 billion declare in FTX’s chapter case.
On Dec. 21, 2023, a British Virgin Islands court docket froze $1.14 billion worth of 3AC co-founder Kyle Davies and Su Zhu’s belongings. Teneo has since estimated that 3AC collectors are nonetheless owed roughly $3.3 billion following the hedge fund’s collapse in 2022.
Davies claimed that allegations from Teneo — the agency in command of 3AC’s liquidation — that he and co-founder Su Zhu have been “not cooperating” have been exaggerated.
Associated: US court gives Three Arrows nod to increase its FTX claim to $1.53B
Lacking $1.5 billion not sufficient to keep away from 3AC collapse
Whereas the $1.53 billion sum is considerably bigger than FTX’s beforehand disclosed liquidations, it could not have been sufficient to save lots of 3AC from chapter, based on Nicolai Sondergaard, analysis analyst at Nansen:
“From what I can see, even when they in 2022 had the extra $1.5 billion they nonetheless wouldn't have been capable of meet creditor claims/debt repayments.”
“With out being a authorized skilled, it appears to me that 3AC, whereas being allowed to pursue a a lot bigger quantity, possible gained’t get the total $1.53 billion declare. It appears lifelike that they are going to get extra, however how a lot is unsure,” the analyst added.
Associated: 3AC liquidators file $1.3B claim against Terraform Labs
Binance co-founder and former CEO Changpeng Zhao referred to as the revelations an “attention-grabbing flip of occasions.”
Supply: CZ BNB
“I'm curious if FTX had something to do with the LUNA/UST crash/depeg in Might 2022,” Zhao mentioned in a March 14 X put up.
The collapse of 3AC occurred a month after that of Terraform Labs’ Terra (LUNC) and TerraClassicUSD (USTC) tokens and shortly earlier than crypto lender Celsius paused all user withdrawals after its native token Celsius (CEL) dropped 90%.
Journal: ‘Hong Kong’s FTX’ victims win lawsuit, bankers bash stablecoins: Asia Express
