3AC founder Kyle Davies claims to have renounced U.S. citizenship and is not subject to U.S. court jurisdiction.

In 2022, the cryptocurrency hedge fund Three Arrows Capital declared bankruptcy due to investment losses and high-risk operations, triggering a downturn in the crypto market. Liquidators stated they will seek to recover $1.3 billion. Kyle Davies claimed in a filing yesterday that he had been a Singaporean citizen since 2017 and therefore not under the jurisdiction of the U.S. court. As a result, the injunctions and orders against him are considered ineffective, indicating that the liquidation process for 3AC is likely to become more challenging.

Background: Liquidators Pursue $1.3 Billion in Funds

In 2022, the bankruptcy hedge fund Three Arrows Capital, founded by Kyle Davies and co-founder Su Zhu, declared bankruptcy due to their unsuccessful investments in the Luna token between May and June last year, as well as risky operations with excessive leverage, resulting in insolvency.

This event also led to a domino effect causing related crypto companies such as Celsius, Genesis, Voyager, among others, to collapse one after another, severely impacting the crypto market and worsening the bearish market conditions.

The management style of the two individuals at Three Arrows Capital was seen as the main cause of its collapse. Therefore, last month, the three liquidators publicly announced their intention to pursue $1.3 billion from Kyle Davies and Su Zhu, although the actual debts they owe could amount to as much as $3.5 billion.

They claim that despite the fund's bankruptcy, the liquidators were forced to bear additional debts that they were not originally responsible for due to the improper actions of the two individuals in the months leading up to its closure.

Kyle Davies' Gesture: Repaying with OPNX Earnings

Initially, the two did not respond positively, only mentioning in a meeting that they would donate earnings from their debt trading platform, OPNX, which they established this year, to creditors voluntarily, stating that this action is unrelated to the liquidation process.

Kyle Davies: I Am Singaporean, Not American

However, according to the latest report from Decrypt, Kyle Davies submitted documents to the court yesterday, claiming that due to marriage reasons, he became a Singaporean citizen as early as 2017 and not an American citizen.

Documents from Davies' renunciation of U.S. citizenship at the U.S. Embassy in Singapore in 2020 show that since Singapore does not allow dual citizenship, he is currently not under the jurisdiction of U.S. courts after marrying and obtaining permanent residency in Singapore, and therefore does not need to respond to the relevant authorities.

It is understood that the submission of this document was made at the request of the 3AC liquidators, who are the ones seeking to recoup the $1.3 billion in funds mentioned above, making it Kyle Davies' official response.

Davies cannot and could not be sued as a non-party in this case, as he ceased to be a U.S. citizen or resident long before this case began.

The document states that if it is genuine, then due to Davies not being a U.S. citizen and all summonses have not been effectively served to date, the court lacks personal jurisdiction over him, rendering the Service Order and Compel Order in U.S. regulations ineffective against him.

Overall, the Compel Order that regulates Davies to submit all relevant information related to 3AC and testify in court is now ineffective, potentially making the liquidation process for 3AC more challenging.