The Final Battle of the Encryption Empire: Unveiling the Controversial $1.5 Billion Claim

On June 23, 2023, the FTX bankruptcy liquidation team submitted an important document to the court, completely denying the $1.53 billion claim from Three Arrows Capital, and requested the judge to dismiss it outright. This move once again brought the long-standing dispute in the cryptocurrency world to a climax and opened a new chapter in the darkest and most chaotic period of the industry.

To understand this complex legal battle, we first need to recognize three key figures and the stories behind them.

First is Sam Bankman-Fried (abbreviated as SBF), the founder of the FTX empire. Before its collapse in 2022, he was seen as a savior of the encryption world, adored by the media and favored by politicians. However, when his empire collapsed, people realized that this "white knight" was just a fraud sentenced to 25 years in prison.

Secondly, there are the founders of Three Arrows Capital, Su Zhu and Kyle Davies. They were known for their aggressive investment strategies and massive leverage, but when the market turned, their myth was shattered, the company went bankrupt, and the two fled in all directions.

Finally, there is John Ray III, an experienced bankruptcy liquidation expert. He handled one of the largest fraud cases in American history – the bankruptcy liquidation of Enron. When he took over the mess of FTX, even this well-informed expert was shocked.

The story takes place in 2022, triggered by a tsunami in the cryptocurrency market caused by the collapse of Terra/LUNA. Three Arrows Capital was the first to be hit, sinking rapidly. A few months later, the seemingly indestructible FTX also suddenly imploded, revealing an astonishing scam.

Today, in the bankruptcy court of Delaware, these two already collapsed giants are engaged in a fierce battle over a debt of $1.53 billion. The liquidator of Three Arrows Capital claims that FTX conducted improper liquidation when they were on the brink of collapse, while FTX insists that their actions were completely in accordance with regulations.

Is this a shameless extortion or a delayed justice? To uncover the truth, we must return to that bloody summer of 2022 and delve into the facts that have been deliberately concealed.

In court, the lawyers for both sides presented completely different versions. FTX claimed that they were merely fulfilling their risk management responsibilities for the platform, while Three Arrows Capital accused FTX of orchestrating a well-planned "black eat black" operation.

However, the truth is far more complex than it appears on the surface. According to later trial testimonies and blockchain data analysis, we now know that during the same period that FTX was liquidating Three Arrows Capital, FTX's own sister company Alameda Research was also in a serious financial crisis. To cope with this crisis, SBF instructed to illegally "borrow" billions of dollars from FTX customers' funds.

This discovery completely changed the nature of the event. FTX's liquidation of Three Arrows Capital was no longer just simple risk management, but more like a drowning person desperately pulling at those around them to save themselves. They were not executing rules, but fighting for their own survival.

Placing this dispute in a broader historical context, we find it has striking similarities to the 2008 financial crisis. The core issue in both cases is the failure to effectively segregate customer assets, which is the most fundamental and important principle in the financial industry.

This $1.5 billion dispute is essentially not a simple contract dispute, but a naked survival game. Three Arrows Capital is certainly a reckless gambler, but FTX is by no means an innocent victim. It is a fraudster that is already terminally ill, trying to cover up its own problems by sacrificing its opponents.

The final ruling of the Delaware court may set some precedents for future cryptocurrency bankruptcy cases. However, for this young industry, history has already provided a deeper warning: when a system lacks effective regulation and transparency, when the ideal of "decentralization" devolves into blind worship of a few big players, there are no true heroes here, only predators dressed in different garbs.

The "battle of the dead" between FTX and Three Arrows Capital is merely a reenactment of countless stories of greed on Wall Street over the past century in a new era. It once again proves that no matter how much technology advances, human greed and fear remain unchanged.