Three Arrows Capital was once one of the most important hedge funds in the cryptocurrency field, managing assets worth tens of billions of US dollars at its peak, but Three Arrows Capital filed for bankruptcy protection in June 2022 after being hit by the Luna crash, over-leveraging, and being insolvent, and is now undergoing liquidation.
With the bankruptcy of 3AC, the $1.14 billion assets of 3AC's founders Zhu Su, Kyle Davies and his wife were frozen by the British Virgin Islands court, and Zhu Su and Kyle Davies were also sentenced to four months in prison (Zhu Su has been released from prison, while Kyle Davies has not yet served his sentence in Singapore).
Initially, in June 2023, Three Arrows Capital filed a $120 million claim against FTX, which was later expanded to include allegations of default, unjust enrichment, and breach of fiduciary duty. After a lengthy legal battle, the US Bankruptcy Court recently ruled that Three Arrows Capital can expand its claim against FTX's bankruptcy assets to $1.53 billion.
Court documents show that as of June 12, 2022, 3AC held $1.53 billion in assets on FTX, but these assets were used to repay FTX's $1.5 billion debt within the next two days.
The FTX liquidation team originally tried to prevent the expansion of the claim, arguing that the timing was inappropriate and lacked legal basis, but the court ultimately ruled that 3AC had the right to make additional requests, citing FTX's own delays in providing financial records, which had impacted 3AC's investigation.
Zhu Su Slams SBF Should Be Sentenced to 250 Years
Interestingly, Zhu Su still seems to harbor resentment towards FTX.
FTX creditor MBottjer tweeted that 3AC requested the Bankruptcy Court to allow its claim against FTX to be increased from $120 million to $1.53 billion, based on 3AC's claim to the court that it had recently discovered evidence that FTX had liquidated about $1.53 billion of its own assets, far exceeding the initial claim of $120 million, in the two weeks before 3AC entered the liquidation process.
MBottjer mentioned that 3AC stated that it was unable to learn of this situation earlier because FTX itself had gone bankrupt and controlled the key data, and 3AC only obtained sufficient details after the official claim deadline had passed.
In response, Zhu Su stated that FTX did indeed illegally sell $1.53 billion worth of Three Arrows Capital's assets and convert them to US dollars in May 2022, and these assets were not lent to FTX, so FTX had no right to liquidate them. He angrily stated that SBF, who has already been sentenced to 25 years, should serve a much longer prison term:
Don't pardon SBF, he should be sentenced to 250 years in prison.
In fact, Zhu Su has long been dissatisfied with SBF. After the FTX collapse in 2022, he fired shots in December 2022, accusing SBF of being the mastermind behind the collapse of 3AC. At the time, SBF flatly denied it, claiming there was no evidence, but Zhu Su retorted that the US Department of Justice would uncover the truth.
