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3AC Co-Founder Asserts Independence from US Court

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Kyle Davies, co-founder of Three Arrows Capital, revealed that he has renounced his U.S. citizenship, claiming that U.S. courts no longer hold jurisdiction over him.

The implications of this decision on the ongoing U.S. portion of the bankruptcy remain uncertain. A hearing on the matter is set for August 8.



Kyle Davies, co-founder of Three Arrows Capital, is attempting to avoid being held in contempt of court by arguing that he is no longer bound by U.S.

laws. In a hearing at the U.S. Bankruptcy Court for the Southern District of New York, Davies, who was born and raised in the U.S., stated that he renounced his U.S. citizenship in late 2020.

Consequently, he no longer considers himself under the jurisdiction of U.S. courts and refuses to subject himself to their authority.

Co-Founders of Failed Hedge Fund Resist Cooperation, Cite Renounced Citizenship

Background: Three Arrows Capital co-founders, Kyle Davies and Su Zhu, are facing efforts to liquidate their failed hedge fund and repay investors. Liquidators in the British Virgin Islands put the company under Chapter 15 bankruptcy protection in the U.S. to benefit from legal shields against creditors.

Claims of Cooperation and Withheld Documents: Davies and Zhu insist they have cooperated with the bankruptcy process, but liquidators overseeing the fund’s wind-down accuse them of withholding crucial documents for months.

Unusual Subpoena Approval: In December, a federal judge approved subpoenas of Zhu and Davies. However, this is the first time Davies has cited his renounced citizenship as a reason for not responding to the subpoena.

Contempt of Court: After Davies failed to respond, lawyers for the liquidators requested him to be held in contempt of court. This could lead to a potential $10,000 per day fine until he responds, along with covering the liquidators’ legal fees related to his refusal to reply.

Contempt Motion Filed against Kyle Davies for Lack of Cooperation

In June, an attempt was made to hold Kyle Davies in contempt following a New York Times profile featuring the co-founders of 3AC, who retreated to Bali after their investment fund’s collapse, costing investors billions. The motion emphasizes Davies’ active engagement with Twitter users about the situation while allegedly failing to cooperate with those handling the fund’s debt unwind.

Davies and his legal team argued that the court cannot enforce the subpoena against him as he is no longer a U.S. citizen. They point out a specific rule that prohibits serving subpoenas to individuals outside the U.S. who are not U.S. nationals or residents. Additionally, Davies claims the subpoena was not properly served as it was sent to his Singaporean lawyer, not directly to him.

The outcome of the ongoing U.S. portion of the bankruptcy remains unclear, with a hearing scheduled for August 8. Despite renouncing U.S. citizenship, U.S. financial regulators and criminal prosecutors may still pursue enforcement actions or indictment against foreign nationals involved in crimes in the U.S. or affecting U.S. citizens or entities.



Notably, 3AC faced investigations by regulators in late 2022, and their fund’s failure preceded other significant crypto collapses, such as FTX’s implosion.

Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.

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