Three Arrows Capital (3AC) co-founder Kyle Davis should be held in contempt of court for ignoring a subpoena related to the bankruptcy proceedings, according to court documents dated June 14 from 3AC liquidators. According to the creditor's legal team , Davis deliberately delayed recovering assets from the former crypto hedge fund.
CIVIL SANCTIONS AGAINST DAVIS for Contempt of Court Include Payment of Attorneys' Fees and A $ 10,000 Fine Each Day UNPlies. ly to suqu, the co-Founder of the Bankrupt Hedge Fund. Cointelegraph has learned from teneo, which is acting as liquidator in the case, that Zhu is not subject to the jurisdiction of the US courts because he is a Singaporean citizen. On Jan. 5, Davis and Zhu were subpoenaed on Twitter for failing to pursue asset recovery after 3AC filed for Chapter 15 bankruptcy in July 2022. Creditors have since accused the founders of "evading" bankruptcy court.
The whereabouts and legal jurisdiction of the founders play a large role in recovery challenges. For example, liquidators must obtain permission from Singaporean and US authorities to subpoena Davis and Zhu through digital channels.
"Three Arrows founders Kyle Livingstone Davis and Su Zhu repeatedly breached their obligations to the court and failed to cooperate with foreign representatives in their efforts to marshal the debtor's assets," the filing reads . A hearing on the motion should be held in the coming we eks According to the liquidators, “Instead of complying with subpoenas and requests for information, the founders ignored their obligations and hid their whereabouts, instead taking the time to create a new venture to trade claims in a cryptocurrency bankruptcy case .”
The motion also asks the US to seek personal jurisdiction over Davis, who is believed to be in Bali. "Based on this record, it could not be clearer that the court can — and should — exercise personal jurisdiction over Davis, find him in willful contempt of court, and impose sanctions."
A partial auction of 3AC's non-fungible token collection held last month brought in $2.5 million. In total, the company reportedly owes creditors $3.5 billion. At its peak, 3AC had an estimated $10 billion in assets under management.
