In February, it was reported that Kyle Davies, the co-founder of Three Arrows Capital (3AC), faced allegations of evading subpoenas related to the collapse of the defunct Singapore cryptocurrency hedge fund. The current custodians of the 3AC estate are now pursuing a daily fine of $10,000 against him for his non-compliance with the New York court’s inquiries.
3AC Co-Founder Faces Contempt of Court
In July of last year, the crypto hedge fund 3AC, which is no longer in operation, filed for Chapter 15 bankruptcy protection. The crypto hedge fund incurred substantial losses due to the meltdown of the Terra blockchain ecosystem. Additionally, significant losses were incurred from the fund’s large holdings in the Grayscale Bitcoin Trust (GBTC).
One month before filing for bankruptcy, reports predicted that the company could potentially become insolvent following liquidations that resulted in multimillion-dollar losses. As the bankruptcy proceedings and liquidations commenced, reports surfaced indicating that co-founder Kyle Davies purportedly neglected to comply with court subpoenas.
The liquidation team and estate managers also served subpoenas to both Davies and co-founder Su Zhu through Twitter. “[Davies] is, without question, aware of the subpoena … having been tagged in 41 replies and 64 retweets … and has, once again, chosen to ignore his duties to Three Arrows,” the liquidators stated at the time.
According to a report by Jack Schickler of Coindesk on June 15, the estate of the hedge fund filed documents stating that Davies should be held in contempt of court due to his lack of response. The report also mentioned that the estate proposed a daily fine of $10,000 as a penalty for disregarding the requests.
In the court filing, it is stated that “Davies’s failure to respond is not due to an inability to engage with the court or any credible qualms with its jurisdiction. It cannot be clearer that the court can—and should— exercise personal jurisdiction over Davies, hold him in willful contempt of court, and impose sanctions.” Schickler’s report further states that a hearing to address the contempt request has been scheduled for August 8, 2023.
What do you think about the 3AC estate looking to sanction Davies for his alleged unresponsiveness to court-ordered subpoenas? Share your thoughts and opinions about this subject in the comments section below.
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