A new court filing shows that liquidators overseeing the bankruptcy proceedings of crypto hedge funds Three Arrows Capital (3AC) have requested the judge to compel the company’s co-founder to cooperate.
According to the liquidators, Kyle Davies has information in his possession that he continues to withhold and they said that the information is necessary for controlling and accessing certain digital assets of the debtor.
| Name | Price | 24H (%) |
|---|---|---|
 Bitcoin(BTC) | $90,375.00 | -1.41% |
 Ethereum(ETH) | $3,119.32 | -2.23% |
 Dogecoin(DOGE) | $0.378070 | -4.07% |
 Cardano(ADA) | $0.62 | 9.82% |
 Polygon(MATIC) | $0.370551 | 0.06% |
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The allegations
The liquidators have also alleged that both co-founders, Davies and Zhu, are not offering forthright cooperation to the team.
They said that in doing so, they are not fulfilling the fiduciary duties that they owe to the 3AC estate.
The motion was filed on Wednesday and if it receives approval from the judge, then Davies would have to comply with the subpoena by March 16th.
The liquidators had asked permission from the judge to subpoena the co-founders of the crypto hedge fund in October last year.
This request received approval in December and the subpoenas had been served on Twitter on January 5th.
The co-founders had been given a deadline of January 26th to comply with the subpoenas, but they had failed to do so.
The complaints
According to the liquidators, they have a problem with how active Zhu and Davies have been on social media as well as in media interviews.
The liquidators said in the filing that Davies had been quite active on Twitter since January 25th, as he had tweeted as well as retweeted dozens of times on the social network.
They said that the co-founder had been doing so while ducking his obligations to the failed firm rather shamelessly.
They asserted that he had been busy in efforts of raising tens of millions of dollars for establishing a new crypto exchange by the name of ‘GTX’.
In January, a pitch deck had leaked for GTX, which showed that Zhu and Davies had joined hands with Sudhu Armugan and Mark Lamb of CoinFLEX for raising funds worth $25 million to launch a new crypto exchange.
CoinFLEX had also undergone restructuring in the previous year.
The fall of 3AC
Liquidation of the crypto hedge fund based in Singapore had begun in June last year, after weeks of speculation that 3AC had suffered massive losses due to the collapse of the TerraUSD stablecoin in May.
Davies had confirmed later that the company had suffered losses worth $200 million due to TerraUSD. Pressure increased as the company’s creditors had margin called.
This means that they had asked for more collateral for securing the funds borrowed. The final blow had come from Voyager Digital, which had issued a default notice worth $600 million.
Davies and Zhu had gone silent on social media for a while. There had been reports in July that the founders were missing and the Singapore offices of the firm were abandoned.
But, the two made a reappearance on social media at the time of the FTX collapse, as Davies called out Alameda Research for ‘hunting’ 3AC trades.
