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3AC’s Kyle Davies given 7 days to comply with subpoena or be held in contempt

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A U.S. judge has ordered Kyle Davies, the co-founder of collapsed digital asset hedge fund Three Arrows Capital (3AC) to comply with a subpoena issued in January or risk being held in contempt of the court.

Davies was served with a subpoena in January after the New York Bankruptcy Court granted a request to serve him on Twitter. 3AC liquidators had tried for months to reach him and in failing to do so, requested to turn to the unorthodox method. A Singapore court granted a parallel request to serve his fellow co-founder, Su Zhu, through the social media platform.

The subpoena ordered Davies to provide the liquidators with private keys, seed phrases and other related documents relevant to the 3AC liquidation process. He was given two weeks to comply but two months later, he has yet to.

Judge Martin Glenn, the chief bankruptcy judge in the Southern District of New York, has now ordered Davies to comply with the subpoena or risk being held in contempt of the court.

Judge Glenn noted that the court could impose sanctions to coerce Davies to comply with the subpoena.

“[A] sanction ‘is considered civil and remedial if it either coerces the defendant into compliance with the court’s order, or . . . compensates the complainant for losses sustained.”

The judge further gave Davies seven days to respond to the ruling: failure to do so affords the liquidators an opportunity to submit a proposed offer granting relief.

“Davies, of course, can appear and contest the Foreign Representatives’ showing, or he can fail to appear as he has done so far, and, frankly, take his chances,” the judge warned.

It’s unclear where Davies or Zhu currently reside. Both have, in recent times, posted photos on social media from various locations, including Bali, Dubai and Bahrain.

Meanwhile, Davies has insisted that there’s no legal action against him, despite the subpoenas in the United States. Speaking in Dubai earlier this month, he told one outlet that the public anger towards him and Zhu is misguided and misdirected.

“If you think about, why are people angry? It has nothing to do with me actually. They’re angry that the market went down. In terms of us, we have no regulatory action anywhere, no lawsuits at all,” he said.

The digital asset hedge fund collapsed in July 2022 after alleged gross mismanagement and reckless borrowing. The 3AC collapse took down other giants such as Voyager Digital and BlockFi which had deep ties to the hedge fund.

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