Three Arrows Capital (3AC) founder Kyle Davies should be held in contempt of court for his failure to respond to a subpoena issued by a New York court, a filing by 3AC liquidators states.
The Southern District of New York issued a subpoena to Davies in March, demanding his involvement in recovering assets previously owned by 3AC. The warrant gave Davies an April 13 deadline, but he has refused to cooperate, the filing says.
Along with his fellow co-founder, Su Zhu, Davies has “…repeatedly defied [his] obligations to the Court and failed to cooperate with the Foreign Representatives’ efforts to marshal the assets of the Debtor.”
“Davies’s failure to respond is not due to an inability to engage with the Court or any credible qualms with its jurisdiction. It cannot be clearer that the Court can—and should—exercise personal jurisdiction over Davies, hold him in willful contempt of court, and impose sanctions.”
The liquidators want the court to impose a $10,000 fine for each day he fails to comply with the subpoena. It also demands attorney fees.
The filing further claims that Davies and Zhu have “hidden their whereabouts and spent their time creating, amongst other things, a new venture to trade claims in cryptocurrency bankruptcy cases.”
The new venture in question is the Open Exchange (OPNX), a trading platform for bankruptcy claims the two founded in February. Despite widespread outrage and criticism, OPNX raised $25 million and went live in April. However, in early May, Dubai’s digital asset watchdog, VARA, sent a written reprimand to the digital asset exchange for operating without a license.
Despite the subpoenas, Davies and Zhu are “living their best life,” they told the New York Times in a recent interview. The two have been traveling the world on the proceeds of their collapsed ‘crypto’ empire, which at its peak, some reports say, was worth $18 billion.
They now live in Bali, Indonesia, which, incidentally, has no extradition policy with the United States.
“If anyone has any problems, just go to Bali,” Davies tells NYT.
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