The Crimes and Punishments of Chain Community Giants: The Truth Behind the $1.5 Billion Bad Debt

A legal battle in the cryptocurrency industry is heating up again. The FTX bankruptcy liquidation team has formally submitted a request to the court to dismiss the $1.53 billion claim from Three Arrows Capital. This move puts two collapsed crypto empires back in the spotlight, unveiling a new chapter in one of the darkest and most chaotic events in crypto history.

To understand this dispute, we need to recognize three key figures and the stories behind them.

First is Sam Bankman-Fried(SBF), the founder of the FTX empire. Once hailed as the savior of the crypto world, he is now trapped in prison, facing a 25-year sentence. Next are the founders of Three Arrows Capital, Su Zhu and Kyle Davies, known for their aggressive investments and massive leverage; now one is in prison while the other is in exile. Lastly, there is John Ray III, a renowned bankruptcy expert, currently responsible for handling the mess left by FTX.

In 2022, a crisis triggered by the collapse of Terra/LUNA swept through the cryptocurrency market. Three Arrows Capital was the first to fall, followed by the shocking scandal of FTX. Now, these two giants that have "gone to the grave" are engaged in fierce battles in court over a "hellish ledger" worth $1.53 billion.

Both sides hold their ground; FTX claims to be the "platform warden" fulfilling its duties, while Three Arrows accuses FTX of conducting a "black-on-black" manhunt. To uncover the truth, we must return to that bloody summer of 2022.

In fact, while FTX was liquidating Three Arrows Capital's assets, its affiliated company Alameda Research was also facing a huge crisis. Caroline Ellison, as a key witness, revealed that SBF instructed her to illegally divert FTX customer funds to cover Alameda's losses.

This testimony reveals the core of the entire event: FTX was not simply following the rules, but rather a bankrupt fraudster desperately trying to protect itself. Their liquidation of Three Arrows was not only to obtain much-needed liquidity, but also to stabilize market confidence and cover up their own crisis.

From a more macro perspective, this dispute bears astonishing similarities to the 2008 financial crisis. The original sin of both is the failure to isolate client assets, turning clients from asset owners into unsecured creditors of the platform. The outcome of both crises is also a prolonged and chaotic liquidation.

The $1.5 billion "Hell Ledger" dispute is essentially a "survival game" of "black eating black." Three Arrows Capital is a self-destructive "super gambler," while FTX is a "fraudster" that conceals its own problems by "sacrificing" its opponents.

Ultimately, this story tells us: in a system lacking effective regulation and transparency, there are no true heroes, only predators with different faces. The "battle of the dead" between FTX and Three Arrows is merely another variation of the tale of greed on Wall Street.