A judge overseeing the bankruptcy proceedings of Three Arrows Capital (3AC) has rejected a motion that sought to hold co-founder Kyle Davies in contempt of court and impose penalties. The decision came after evidence emerged of Davies’ Singapore citizenship, media reports said.
In a filing dated August 11 with the United States Bankruptcy Court for the Southern District of New York, Judge Martin Glenn explained that previous rulings on motions related to a subpoena issued to Davies via X (formerly known as Twitter) were made under the assumption that he was a U.S. citizen residing within the country.
However, it was revealed that Davies is a non-U.S. citizen living outside the United States. Judge Glenn referred to federal laws governing compliance outside the U.S., noting that his prior approvals were based on the presumption of Davies’ U.S. citizenship.
Davies’ lawyers submitted evidence on August 1 indicating that he had applied to renounce his U.S. citizenship in December 2020 and subsequently became a citizen of Singapore after marrying a national. As Singapore doesn’t permit dual citizenship, Davies’ move was significant. This evidence was presented in response to a contempt motion filed by foreign representatives of 3AC in the U.S. bankruptcy case, who alleged that Davies had not responded to an online subpoena.
Judge Glenn highlighted that until Davies contested the motion, the court had operated under the assumption of his U.S. citizenship, with the potential for establishing personal jurisdiction. He clarified that Davies’ U.S. citizenship was necessary for proper service of the subpoena, which was not fulfilled.
The judge suggested that the foreign representatives explore options for compelling Davies’ compliance through Singaporean courts. He ultimately dismissed the contempt motion and indicated that the U.S. court had limited jurisdiction over Davies.
3AC’s other co-founder, Su Zhu, a Singaporean national, was also issued a summons via X but is beyond the jurisdiction of the U.S. court due to his residence outside the United States. The whereabouts of both Davies and Zhu have largely remained undisclosed since 3AC’s collapse in July 2022. However, Davies’ lawyers disclosed his Singaporean residence in the August 1 filings.
Liquidators overseeing 3AC’s affairs are striving to recover approximately $1.3 billion in funds from the two co-founders. The firm reportedly owes creditors a substantial sum of $3.5 billion. Earlier in April, Davies and Zhu participated in the launch of Open Exchange, a platform designed to enable users to trade claims against bankrupt crypto companies.
