A U.S. bankruptcy court has allowed the liquidators of the defunct crypto hedge fund Three Arrows Capital to substantially increase its claim against the collapsed crypto exchange FTX from $120 million to $1.53 billion.

In a March 13 ruling by the US Bankruptcy Court for the District of Delaware, the judge ruled that FTX is to pay out $1.53 billion to Three Arrows Capital, increasing the claim from the original $120 million filed in June 2023. FTX objected to the decision, arguing it was too late and would slow down their bankruptcy process. However, the judge sided with 3AC’s liquidators, opining that they had provided sufficient notice of their claim. The judge determined that the delay in filing the larger claim was mainly due to FTX not promptly sharing relevant records with 3AC’s liquidators. 3AC liquidators needed that information to properly assess and detail their claim.

The 3AC’s liquidators are claiming that FTX held $1.53 billion in 3AC’s assets, which were then liquidated to pay off 3AC’s debts. Furthermore, 3AC liquidators argued that those transactions were avoidable and that FTX didn’t provide the information that would’ve uncovered the liquidation.

Both 3AC and FTX were once major players in the crypto world, but both are no defunct. Three Arrows Capital was one of the largest crypto hedge funds that collapsed in June 2022 due to forced liquidation of overleveraged positions in Bitcoin (BTC), Ethereum (ETH), and other altcoins. They filed for bankruptcy in July 2022. Its liquidators are now trying to recover funds by selling their remaining assets and through various lawsuits, most notably against FTX and Terraform Labs to repay its creditors.

FTX crypto exchange declared bankruptcy in Nov. 2022 and has also seen been trying to recoup funds through various lawsuits, including one against Binance and Changpeng Zhao. FTX recently started their repayment process facilitated through BitGo and Kraken exchanges.

Bybit CEO Ben Zhou has suggested that the ongoing crypto market liquidation event may be significantly larger than widely reported.

According to CoinGlass data, over $2 billion in digital liquidations in 24 hours on Monday, Feb. 3, marking the single largest liquidation event in crypto history.

Several analysts estimated liquidations exceeded $2.2 billion, surpassing the COVID crash and FTX collapse, two of the most significant liquidation events ever recorded.

Yet, Zhou said the numbers may be underreported due to API limits. According to Bybit’s co-founder, the crypto exchange limits how much data is pushed to aggregators like CoinGlass. Other platforms likely use a similar capped system, Zhou said via X.

Zhou estimated that liquidations on Bybit alone accounted for $2.1 billion in losses, representing over 85% of the total reported figures. “I am afraid that today’s real total liquidation is a lot more than $2 billion. By my estimation, it should be at least $8 billion to $10 billion,” Zhou said.

Following Zhou’s comments, crypto community members debated the accuracy of the reported figures. Some speculated that previous liquidation events, such as the COVID crash and the FTX collapse, may have also been underreported.

Looking ahead, Zhou pledged that Bybit would begin sharing all liquidation data with the public. “We believe in transparency,” he stated, as digital assets reeled from a massive leverage flush.