Newly revealed court documents indicate that FTX secretly liquidated $1.53bn worth of Three Arrows Capital (3AC) assets just two weeks before the crypto hedge fund’s 2022 collapse – challenging previous narratives that fund's failure was market-driven, according to a report by CoinTelegraph.

Once a $10bn business, 3AC crumbled in mid-2022 after a series of highly leveraged directional trades went awry. The firm had borrowed from over 20 institutional lenders before the May 2022 crypto market crash, which saw bitcoin plunge to $16,000.

The recently uncovered evidence of the asset sale has prompted 3AC to amend its bankruptcy claim against FTX, increasing its original demand from $120m to $1.53bn, according to "Mbottjer," the pseudonymous co-founder of FTX Creditor, a group representing FTX creditors and bankruptcy claim buyers.

“3AC says it only recently discovered evidence that FTX liquidated $1.53bn of its assets just two weeks before it went into liquidation – far more than the $120m originally claimed,” Mbottjer stated.

3AC alleges it was never notified of these liquidations due to FTX’s own bankruptcy proceedings. A court has since ruled that 3AC acted in good faith, allowing it to pursue the full $1.53bn claim in FTX’s bankruptcy case.

The hedge fund’s co-founders, Kyle Davies and Su Zhu, have already had $1.14bn in assets frozen by a British Virgin Islands court. Meanwhile, liquidators at Teneo estimate that 3AC creditors are still owed roughly $3.3bn following the firm’s collapse.

Despite the staggering sum involved, some analysts argue that the additional $1.5bn alone would not have prevented 3AC’s collapse.