Hold onto your hats, crypto enthusiasts! A bombshell revelation has just rocked the digital currency world. Court documents have unveiled that FTX, the once-mighty crypto exchange, stealthily liquidated a whopping $1.53 billion in assets belonging to Three Arrows Capital (3AC) just a fortnight before the hedge fund’s spectacular collapse in 2022. This juicy tidbit flips the script on the previous belief that 3AC’s downfall was purely due to market forces.
3AC, once a titan valued at over $10 billion, crumbled in mid-2022 after a series of high-stakes trades went south. The hedge fund had borrowed heavily from more than 20 major institutions before the May 2022 crypto crash, which saw Bitcoin (BTC) nosedive to $16,000. But here’s the twist: FTX’s liquidation of 3AC’s assets occurred just two weeks before this financial catastrophe.
In a dramatic turn, 3AC has now petitioned a bankruptcy court to amplify its claim against FTX from a mere $120 million to a staggering $1.53 billion. According to “Mbottjer,” the pseudonymous co-founder of FTX Creditor, this revelation only recently came to light, shaking up the crypto community.
The hedge fund asserts it was left in the dark about these liquidations due to FTX’s own bankruptcy woes. A court has since ruled that 3AC acted in good faith, granting it permission to chase its full claim in FTX’s bankruptcy proceedings.
Fast forward to December 21, 2023, when a British Virgin Islands court froze a colossal $1.14 billion of assets belonging to 3AC co-founders Kyle Davies and Su Zhu. Despite this, Teneo estimates that 3AC creditors are still owed a jaw-dropping $3.3 billion following the hedge fund’s collapse.
Davies has pushed back against allegations from Teneo, the firm overseeing 3AC’s liquidation, claiming that accusations of non-cooperation by him and co-founder Su Zhu are overblown.
Now, let’s dive into the meat of the matter. While the $1.53 billion sum is eye-popping, Nicolai Sondergaard, a research analyst at Nansen, suggests it might not have been enough to stave off 3AC’s bankruptcy. Even with this additional windfall, meeting creditor claims and debt repayments would have been an uphill battle.
Sondergaard speculates that while 3AC may be allowed to pursue a larger claim, securing the full amount remains uncertain. The crypto world watches with bated breath as this saga unfolds.
Adding fuel to the fire, Binance co-founder Changpeng Zhao has weighed in on the revelations, calling them an “interesting turn of events.” Zhao even hinted at potential connections between FTX and the infamous LUNA/UST crash in May 2022.
The collapse of 3AC followed closely on the heels of Terraform Labs’ Terra (LUNC) and TerraClassicUSD (USTC) tokens’ downfall and preceded crypto lender Celsius halting user withdrawals after its native token Celsius (CEL) plummeted by 90%.
As this gripping tale continues to unravel, one thing is clear: the crypto world is never short on drama. Stay tuned for more twists and turns in this high-stakes saga!
