The financial blows of the cryptocurrency market crashes in 2022 continue to reverberate in the industry. The latest chapter is unfolding as Three Arrows Capital (3AC) subpoenaed former FTX executives, including Sam Bankman-Fried (SBF), Caroline Ellison, and Ryan Salame, alleging a $1.5 billion illegal liquidation. This legal battle is unearthing further complexities in the dramatic collapse of two major crypto entities.
The Key Accusations and Legal Developments
3AC’s liquidators filed legal actions accusing FTX, under the leadership of Bankman-Fried, of force-liquidating $1.5 billion from 3AC’s positions without proper authorization. This act allegedly accelerated 3AC’s collapse during the volatile June 2022 market crash.
Central to this legal case is the testimony scheduled for October 14, 2025, where Sam Bankman-Fried will provide sworn testimony from a California prison. Alongside this, Caroline Ellison’s trading practices at Alameda Research and Ryan Salame’s alleged use of insider information to profit over $1 billion are under heavy scrutiny.
FTX’s Defense and Ongoing Refund Efforts
FTX has refuted the allegations, stating that 3AC’s account balance was closer to $284 million rather than the claimed $1.6 billion. The estate maintains that only $82 million was liquidated within its contractual rights, with most losses attributed to the broader market crash rather than unlawful actions.
Despite the legal turmoil, FTX has continued its efforts to repay creditors. Since 2022, approximately $6.2 billion has been distributed through trusted financial partners such as BitGo, Kraken, and Payoneer. However, controversies remain, particularly the exclusion of payouts in 49 jurisdictions, sparking protests from over 300 Chinese investors.
What This Means for the Future of Crypto Legalities
The subpoenas targeting Bankman-Fried, Ellison, and Salame highlight accountability in an industry shaken by high-profile collapses. October 2025’s testimony will likely serve as a pivotal moment for both 3AC’s recovery efforts and broader discussions on enforcing regulatory frameworks in the crypto world.
As the legal drama intensifies, one lesson remains clear: the need for transparent practices and robust safeguards to protect investors in the volatile digital asset market.
Investors Beware: Tools to Navigate Crypto Risks
For investors keen on safeguarding their assets, tools like Ledger’s Nano X cryptocurrency hardware wallet (available here) offer enhanced security to prevent losses during market turbulence. This hardware wallet supports a wide range of assets and features state-of-the-art encryption technology, ensuring peace of mind in uncertain times.
