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The FTX bankruptcy liquidation team has rejected Three Arrows Capital's (3AC) $1.53 billion claim, sparking a legal battle between the two collapsed crypto giants. 3AC accuses FTX of illegally seizing assets, while FTX counters that 3AC defaulted. The case exposes FTX's internal fund misappropriation, regulatory failures, and the greed at the heart of the crypto industry. This dispute mirrors the chaos of crypto and echoes traditional financial crises.
$1.5 Billion Bad Debt: How SBF Hunted Down the Cancerous Empire Behind Three Arrows?
The war has reignited! On June 23, the FTX bankruptcy liquidation team dropped a bombshell in court, outright rejecting 3AC’s staggering $1.53 billion claim and demanding the judge wipe it clean. This resounding slap has escalated the years-long "battle of the dead" between two buried crypto empires, their ghosts once again tearing into each other in court. This latest legal clash peels back the curtain on one of crypto history’s darkest, most chaotic "Rashomon" events.
To understand this drama, we must first meet the three key players and the blood-soaked saga behind them—a tale fit for Hollywood.
The First Player: Sam Bankman-Fried (SBF), the disheveled-haired founder of the FTX empire. Before the 2022 avalanche, he was crypto’s golden boy, the "white knight" in the eyes of believers. Media compared him to J.P. Morgan; politicians courted him. With his messy hair, shorts, and T-shirts, he played the unkempt genius, claiming crypto would save the world. But when his empire crumbled, the world saw the truth: beneath the armor was emptiness. Now, he’s a convicted "scammer of the century," sentenced to 25 years in prison.
The Second Player: Su Zhu and Kyle Davies, founders of Three Arrows Capital (3AC). They were crypto’s "high rollers," notorious for their arrogance, aggressive bets, and billions in leverage. Their "supercycle theory" was once gospel; their words moved markets. But when the tide turned, their myth proved to be a bubble. After bankruptcy, they fled—one jailed in Singapore, the other playing "exiled nobleman" under Dubai’s sun.
The Third Player: John J. Ray III, the real heavyweight. His résumé’s crowning glory? Liquidating Enron, one of America’s biggest frauds. When called to clean up FTX, even this battle-hardened "liquidation king" was stunned. He told the court: "In my 40-year career, I’ve never seen such a complete failure of corporate controls and such a total absence of trustworthy financial information."
The story unfolds among these three. In 2022, the collapse of Terra/LUNA triggered a crypto tsunami. 3AC, a luxury cruise ship built on leverage and debt, hit the iceberg first and sank. Months later, the seemingly invincible FTX imploded without warning, exposing a $10 billion fraud.
Now, in Delaware’s bankruptcy court, the ghosts of these two buried giants are locked in a bitter fight over a $1.53 billion "hell ledger." 3AC’s liquidators claim FTX, like a bloodthirsty shark, engaged in a ruthless "eat-or-be-eaten" move, illegally swallowing their last assets as 3AC drowned. FTX’s team fires back: "You gamblers blew up your own game—don’t try to tear flesh from us victims!"
Is this shameless extortion or belated justice? To unravel this "Rashomon," we must return to the blood-soaked summer of 2022 and dredge up the buried truths.
One Contract, Two Narratives
In court, lawyers from both sides present diametrically opposed stories—like two ledgers recording the same event with entirely different entries.
FTX’s Ledger tells a tale of "order and rules." Here, FTX is the dutiful, impartial "platform warden." The logic is simple: 3AC was a big but reckless client. When Terra/LUNA’s collapse triggered a market quake, 3AC’s accounts tanked, breaching margin requirements and defaulting.
FTX claims it repeatedly asked 3AC to post more collateral, but 3AC ignored the calls—even withdrawing $18 million in Ethereum from its crumbling account. To FTX, this was like looting a burning house. Their response? A by-the-book, emotionless risk management move: liquidating part of 3AC’s holdings to prevent negative equity and protect other clients.
Under John Ray III’s steely gaze, FTX’s legal team stands firm. They argue FTX’s creditors shouldn’t—and can’t—be the "bag holders" for 3AC’s failed bets. Their narrative paints FTX as the "responsible gatekeeper" protecting everyone in the storm.
3AC’s Ledger spins a story of "conspiracy and hunting." It begins in ruins. When liquidators took over 3AC, they found hard drives wiped, computers missing, and almost no records. Su Zhu and Kyle were uncooperative, making liquidation a nightmare.
Initially, with scant information, liquidators filed a placeholder $120 million claim against FTX. But after legally forcing FTX to hand over raw trading data, a shocking picture emerged: during the two days FTX claimed 3AC defaulted and liquidated, $1.53 billion in assets vanished from 3AC’s accounts.
This discovery changed everything. 3AC’s liquidators upped their claim to $1.53 billion. FTX cried foul, but the judge ruled the delay was largely FTX’s fault—they’d dragged their feet providing data. This judicial nod gave 3AC’s "conspiracy theory" weight. If FTX’s liquidation was so aboveboard, why hide the records? Unless the ledger held darker secrets.
The Fraud’s Core: Alameda’s Distress Signal
To crack this case, we must rip off SBF’s "white knight" mask and see what was really happening inside FTX’s crumbling heart in June 2022.
The key witness? Caroline Ellison, SBF’s ex-girlfriend and CEO of his shadow empire, Alameda Research.
At SBF’s criminal trial, Caroline, now a cooperating witness, revealed a bombshell: in the same week FTX "liquidated" 3AC for "margin failure," Alameda was drowning in losses from Terra’s collapse, with a multi-billion-dollar hole in its balance sheet. Lenders were circling like sharks.
Desperate, SBF allegedly told Caroline to open a "secret backdoor"—stealing billions from FTX customer funds to repay Alameda’s loans.
This testimony was a lightning bolt, illuminating the rot. While FTX played "strict warden," its "favored child" Alameda was secretly, illegally siphoning client money to stay afloat.
Blockchain data coldly confirms the lie. Analytics firm Nansen found that during 3AC’s collapse, Alameda sent $4 billion worth of FTT (FTX’s in-house token) to FTX’s wallets—using near-worthless "funny money" as collateral for real client funds.
Now, SBF’s public act at the time looks Oscar-worthy. While secretly looting customer funds, he told Forbes: "We’re willing to do a somewhat bad deal if it’s what’s needed to stabilize things and protect customers."
The irony is crushing. He wasn’t a savior but an insolvent fraud. His "rescue" was a desperate bid to stop the dominoes from falling—and exposing his own gaping hole.
With these pieces, 3AC’s "SBF hunted us" claim gains credence. For FTX/Alameda, already drowning in June 2022, liquidating a big, leveraged player like 3AC had two motives:
"Kill and loot"—grab urgently needed liquidity.
"Kill the chicken to scare the monkeys"—sacrifice a risk source to buy time and hide their own rot.
This wasn’t rule enforcement. It was a drowning man pulling another under to stay afloat.
The Ghost of Lehman Brothers
Zoom out, and this feud isn’t new. Strip away crypto’s jargon and tech veneer, and it’s 2008’s financial crisis redux—a "Lehman Brothers" rerun.
The original sin is identical: failure to segregate client assets.
This is finance’s brightest red line. Whether old-school banks or crypto exchanges, client money is sacred. Yet Lehman was found guilty of "stunning failures" in client fund segregation. FTX’s entire fraud was built on blending client funds with Alameda’s trading capital—a catastrophic risk transfer turning clients into unsecured creditors.
The endings mirror too: messy, drawn-out liquidations.
Lehman’s bankruptcy took years to untangle. Now, John Ray III faces the same nightmare with FTX: opaque structures, missing records, and hard-to-value crypto assets.
History doesn’t repeat, but it rhymes. The FTX-3AC saga isn’t a unique "crypto" problem—it’s a classic tale of financial arrogance, regulatory failure, and human greed, dressed in Web3’s trendy clothes.
A Hero-Less Ending
So, what’s the truth behind this $1.53 billion "hell ledger" fight?
The truth is, this isn’t a contract dispute. It’s a bare-knuckled "predator vs. predator" survival game. 3AC was a reckless, greedy gambler that blew itself up. But FTX was no innocent rule-follower—it was a cancerous fraudster, sacrificing others to disguise its own decay.
A dying gambler met a wolf in sheep’s clothing. In crypto’s lawless slaughterhouse, they fought one last bloody round.
Delaware’s final ruling may set precedents for future crypto bankruptcies. But for this industry that dreamed of disrupting finance, history’s verdict is already in: Without strong regulation, transparency, and real accountability, there are no heroes—only predators in different masks.
Greed and fear never change. FTX vs. 3AC is just Wall Street’s oldest story, retold in crypto slang.
