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- CZ questions FTX’s involvement in the LUNA/UST crash amid new evidence of 3AC’s $1.53B asset liquidation.
- A U.S. court allows 3AC to expand its $1.53B claim against FTX, intensifying legal battles over the 2022 crypto collapse.
The collapse of Terra’s LUNA and UST in May 2022 triggered a series of financial failures in the crypto market. Binance founder Changpeng Zhao (CZ) has now raised concerns about FTX’s potential involvement in the crash. In a recent tweet, CZ questioned whether FTX played a role in the de-pegging of UST.
His statement follows new revelations that FTX liquidated $1.53 billion worth of 3AC’s assets just two weeks before the hedge fund’s collapse. With legal proceedings still unfolding, connections between FTX, 3AC, and LUNA’s downfall remain under scrutiny.
CZ Questions FTX’s Role in LUNA’s Collapse
Changpeng Zhao has commented on the close relationship between FTX and Three Arrows Capital (3AC). He expressed curiosity about whether FTX had any involvement in the LUNA and UST collapse. Zhao’s remarks follow recent revelations that 3AC’s liquidators discovered evidence that FTX liquidated $1.53 billion in 3AC’s assets just weeks before its bankruptcy.
Interesting turn of events. I didn’t know this before, but not surprised either as they (FTX/3AC) were “close”.
I am curious if FTX had anything to do with the LUNA/UST crash/depeg in May 2022? https://t.co/oubjKHvfMC
— CZ
BNB (@cz_binance) March 14, 2025
In a legal dispute, 3AC’s liquidators sought to expand their claims against FTX from an initial $120 million to $1.53 billion. A U.S. bankruptcy court ruled in favor of 3AC, allowing the liquidators to pursue the larger claim. Judge John T. Dorsey noted that FTX’s failure to provide timely records contributed to delays in filing.
FTX’s current leadership, led by CEO John Ray III, objected to the ruling, arguing that the claim introduced new legal theories and substantially increased its scope. However, the court dismissed these objections, stating that FTX had prior notice of the claims.
3AC’s Collapse and Legal Battle with FTX
Three Arrows Capital (3AC), once managing over $3 billion in assets, faced massive losses after making highly leveraged bets on digital assets, including TerraUSD (UST). The firm’s downfall began when UST depegged in May 2022, causing LUNA’s value to crash. This collapse triggered a chain reaction, affecting the crypto-lending sector and leading to the liquidation of Voyager Digital and BlockFi.
Court filings reveal that 3AC held $1.53 billion in assets on FTX as of June 12, 2022. Within two days, FTX liquidated these holdings to recover $1.3 billion of debt owed by 3AC. Liquidators have since accused FTX of breaching fiduciary duties and unjustly enriching itself.
They also secured a global freeze on $1.4 billion in assets linked to 3AC’s founders, Su Zhu and Kyle Davies, preventing access to their funds while legal proceedings continue.
Su Zhu was arrested in Singapore after attempting to leave the country. Authorities detained him at Changi Airport after a committal order from Singapore’s courts, complicating the ongoing liquidation efforts.
Meanwhile, Binance, led by CEO CZ, also faced regulatory challenges. As reported by ETHNews, the exchange agreed to a $4.3 billion settlement with U.S. authorities. Additionally, Binance plans to delist non-MiCA-compliant stablecoins in Europe by 2025, aligning with the EU’s crypto regulations.
