3AC liquidators file motion to hold Kyle Davis in contempt

Three Arrows Capital (3AC) co-founder Kyle Davis should be held in contempt of court for ignoring a summons related to bankruptcy proceedings, a June 14 court filing from 3AC’s liquidators shows. According to the creditor’s legal team, Davis has been deliberately delaying the recovery of assets from the former crypto hedge fund.

Civil sanctions against Davis for contempt include an award of attorneys’ fees and a $10,000 daily fine until he complies. The offer does not apply to Su Zhu, co-founder of the bankrupt hedge fund. Because of his Singaporean citizenship, Zhu is not subject to the jurisdiction of United States courts, Cointelegraph learned from Teneo, the firm acting as liquidator in the case.

On January 5, Davis and Zhu were summoned on Twitter for failing to engage in asset recovery after 3AC filed for Chapter 15 in July 2022. Since then, creditors have accused the founders of “running away” from bankruptcy court.

Founders’ whereabouts and legal jurisdiction play a significant role in recovery challenges. For example, the liquidator had to obtain permission from the Singaporean and US authorities to summon Davies and Zhu through digital channels.

“The founders of Three Arrows, Kyle Livingstone Davis and Su Zhu (…) have repeatedly breached their obligations to the Court and failed to cooperate with foreign representatives’ efforts to marshal the debtor’s assets, reads the document. A hearing on the motion should take place in the coming weeks.

According to the liquidators, instead of complying with subpoenas and information requests, “the founders have ignored their obligations, concealed their whereabouts, and instead spent their time trading claims in cryptocurrency bankruptcy cases, among other things.” spent building a new venture for.”

The resolution also asks the US to seek personal jurisdiction over Davis, who is believed to be in Bali. “On this record, it cannot be clearer that the Court can and should exercise personal jurisdiction over Davis, hold him in willful contempt of court, and impose sanctions.”

An auction of parts of 3AC’s non-fungible token collection held last month brought in $2.5 million. The firm reportedly owes creditors a total of $3.5 billion. During its peak, 3AC reached an estimated $10 billion in assets under management.

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