3AC founder Kyle Davies tells court he has renounced US citizenship

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The co-founder of hedge fund Three Arrows Capital (3AC), Kyle Davies, has told the court in charge of overseeing the firm’s bankruptcy that he will not be “subjecting himself to, or accepting jurisdiction of, the Courts in the United States” because he has renounced his U.S. citizenship.

Davies had been subpoenaed by 3AC liquidators attempting to recover $1.3 billion from Davies and co-founder Su Zhu. The subpoenas sought 3AC documents, including seed phrases and private keys to 3AC wallets. After Davies ignored the summons, the liquidators filed a motion for the court to hold him in contempt and levy fines of $10,000 a day until he complies.

It is that request for contempt that finally inspired Davies to respond. In a filing, Davies said that since he was not a U.S. citizen, the subpoena was not validly served on him.

“Since Davies has not been validly served, the Court does not have personal jurisdiction over him. The Service Order and Compel Order were premised on the incorrect presumption that Davies is a U.S. citizen, and therefore they should be vacated.”

In the original motion for contempt, the liquidators said that Davies’s failure to respond to the subpoena “is not due to an inability to engage with the court or any credible qualms with its jurisdiction.”

The court was evidently aware of Davies’ potential jurisdiction quibble when mandating compliance with the subpoena, with Judge Martin Glenn saying that “to the extent that the court does not have a full record on which to decide the jurisdiction issue, that problem is solely the product of Davies’ failure to appear.”

Kyle Davies and Su Zhu living large as fugitives

Davies and his co-founder Zhu have been fugitives since the 3AC collapse was completed in July 2022. As 3AC was being unraveled by risky bets on things like Do Kwon’s Terra-Luna disaster, Davies and Zhu fled their Singapore headquarters and spent months living large around the world while the rest of the industry grappled with the more than $3 billion lost by the firm.

Though careful to avoid being physically present anywhere within the reach of the U.S. justice system, both Zhu and Davies have been active on social media since going on the run. Rather comically, both men took to Twitter, now X, to express distaste for Sam Bankman-Fried’s FTX scam without a hint of irony:

SBF can try to argue he was a child playing in an unregulated offshore sandbox.

But Barry was a full grown man who architected the entire highly regulated lending daisy chain from his left to right pocket.

It’s going to get messy af.

— Kyle 🐂 (@KyleLDavies) January 2, 2023

Improbably, the two were last seen trying to promote their next ‘crypto’ venture, drawing censure from Dubai’s digital asset regulator. A filing made by the 3AC liquidators this week said:

“Davies is indisputably aware of these court proceedings, but rather than comply with this court’s orders, he has spent his time publicly promoting his next ventures — which include a business that seeks to profit from Three Arrows’ bankruptcy and does so by improperly using Three Arrows’s name and logo — and bringing a U.S. lawsuit despite refusing to participate in this one.”

In an industry that always seems ready to hand more money over money to proven criminals, they might have a shot at a comeback if only they can stay away from the reach of U.S. courts.

Follow CoinGeek’s Crypto Crime Cartel series, which delves into the stream of group—from BitMEX to Binance, Bitcoin.com, Blockstream, ShapeShift, Coinbase, Ripple,
Ethereum, FTX and Tether—who have co-opted the digital asset revolution and turned the industry into a minefield for naïve (and even experienced) players in the market.