Taiwan pushes to unveil a groundbreaking cryptocurrency law by November, steering through the robust tide of digital finance.
Kyle Davies states that he hasn’t been a US citizen since late 2020, and, as a result, he believes that contempt of court charges in the US do not apply to him.
With the hearing only a week away, there is confusion about how the courts will hold him accountable for his failed crypto hedge company.
Davies claims to be a Singapore National
Kyle Davies is one of the founders of the collapsed Three Arrows Capital (3AC). The hedge fund firm was among the first to fall last year in a series of shocks ravaging the crypto industry.
He and co-founder Su Zhu were ordered by the US courts to cooperate with liquidators to recover investors’ funds. However, Davies has been accused by the liquidators of being uncooperative. He is said to hold back crucial documents and has not been responsive for months.
This led to the US courts issuing a contempt of court motion against him. The motion orders Davies to present himself on August 8.
In a turn of events, Davies informed the US Bankruptcy Court in New York that he has not been a US citizen since 2020. As such, he argued that US courts do not have any jurisdiction over him.
“For the avoidance of doubt, I am not subjecting myself to, or accepting the jurisdiction of, the Courts in the United States.”– Three Arrows Capital Co-Founder, Kyle Davies
In the meantime, both founders are still active in the crypto space. They started a crypto trading platform called Open Exchange soon after the 3AC liquidation started. The exchange has received negative reactions from institutional investors so far. This hasn’t stopped Davies or Su Zhu from promoting the platform.
The Three Arrows Capital Saga
Three Arrows Capital, also known as 3AC and TAC, was set up by Kyle Davies and Su Zhu. The Columbia University alumni worked for Credit Suisse before setting up 3AC in 2012.
Originally focusing on arbitrage trading, the direction quickly changed to cryptocurrencies. The firm borrowed funds to trade and hedge. The firm faced issues with the LUNA collapse and Greyscale tremors – two of its largest investments.
Eventually, 3AC could not meet its margin calls and filed for bankruptcy in July 2022.
Davies’ noncooperation with the liquidators of 3AC led to a motion for contempt of court. The motion may see up to a $10,000 fine per day.
Though a subpoena was already issued to him, his lawyers argue the subpoena is not valid since he is not a US citizen. The subpoena itself was not submitted properly, as per the lawyers. The documents were routed to Davies’ Singaporean lawyer instead of him directly.
In light of this, it’s unclear how the courts will handle the process of providing the sought-after documents to 3AC liquidators.
3AC still needs to repay $1.3 billion in creditor claims.