Kyle Davies, a co-founder of the now-bankrupt cryptocurrency hedge fund, Three Arrows Capital, has become the core of an inquiry. Davies has asserted that he is beyond the reach of the United States courts as he renounced his American citizenship in 2017, aligning with Singapore’s non-acceptance of dual citizenship. His assertion is firmly rooted in his decision to relocate to Singapore and embrace Singaporean citizenship. It seems as though Davies is striving to maintain his status as an independent player, unbounded by U.S jurisdiction.
Swapping neutrality for skepticism, however, it raises an eyebrow that this claim arises amidst impending court proceedings. His funds, namely Three Arrows Capital, suffered a harsh blow with the collapse of the Terra ecosystem in 2022, leading to considerable financial loss and ultimately bankruptcy.
In lieu of these unfolding events, Davies and Su Zhu, a fellow co-founder, were accused of pursuing leverage in the face of insolvency. In monetary terms, the liquidators alleged a shocking sum of $1.3 billion. Despite the successful retrieval of some the fund’s assets, these only represent a sliver of the $3.5 billion deficit showcased in the company’s balance sheet due to bankruptcy.
Yet, while their former fund was in ruins, Davies and Zhu were seen enjoying a luxurious lifestyle in Bali. Individuals might question the morality and the responsibility here. Their actions certainly don’t mirror the hardship faced by their clients due to the firm’s bankruptcy. Reportedly, they were savoring life, reading on beaches, attending Formula 1 events, hanging out with surfers and UFC fighters, and even embarking on a new project—an exchange for trading crypto-related bankruptcy claims.
Nevertheless, the new crypto-exchange, OPNX, has not been immune to regulatory scrutiny either. There are allegations of Davies and Zhu promoting OPNX without attaining the requisite licensing from local authorities. In this scenario, where does the line between innovative defiance and reckless non-compliance lie?
We cannot overlook the notion of rules and regulations in the context of blockchain and cryptocurrency. Regardless of Davies’ assertion of non-jurisdiction, it appears clear that adherence to local regulatory norms is crucial for the industry’s overall health and sustainability. Thus, the matter at hand is more than just about a series of events; it is a case of responsibility and compliance in an ever-evolving technological space.
Source: Cryptonews
