- Three Arrows Capital co-founder Kyle Davies has been told to produce financial papers relating to the defunct crypto hedge fund
- The judge presiding over the U.S. bankruptcy proceedings has reaffirmed his demand that Davies cooperate
- Davies faces a contempt of court charge if he fails to comply
The U.S. judge presiding over the bankruptcy proceedings of Three Arrows Capital (3AC) has directed co-founder Kyle Davies to produce financial papers relating to the defunct crypto hedge fund. Judge Martin Glenn issued a second order after giving his opinion on the matter last week, requiring Davies to provide financial documents within 14 days or face contempt of court charges. Davies missed the previous deadline of March 16. This is not the first time the liquidators have accused Davies of withholding information; they filed a similar motion in February to compel his cooperation, claiming he had been “shamelessly” raising millions to launch a new company.
Co-founder Still Refusing to Cooperate
The Singapore-based 3AC was ordered to liquidate in June 2022 after suffering significant losses following the collapse of the TerraUSD algorithmic stablecoin in May. In an interview with The Wall Street Journal, Davies confirmed that 3AC had lost around $200 million on its TerraUSD position, and creditors margin called 3AC, requesting the firm to provide more collateral to secure borrowed funds. Voyager Digital also issued a default notice for over $600 million, which was the final blow for the firm.
Davies and co-founder Su Zhu went quiet on social media for a few months before resurfacing when crypto exchange FTX collapsed and filed for bankruptcy in November last year. The subpoena was served over Twitter on January 5 after conventional means of serving Davies were unsuccessful. The court gave the 3AC liquidators permission to use social media to serve the subpoena, which was a tweet that tagged Davies and Zhu and included images of the subpoena.
Zhu Not Implicated
Zhu is not subject to the judge’s new order to cooperate. In his opinion, Judge Glenn wrote that the liquidators have not provided enough evidence to establish U.S. jurisdiction for Zhu. The judge noted that Davies has been active on social media since January 5, 2023, having tweeted or retweeted dozens of times on Twitter, while refusing to respond or comply with court orders.
