Co-founder of Bankrupt Hedge Fund Rejects US Jurisdiction, Citing Renounced Citizenship
In a recent filing with the U.S. Bankruptcy Court for the Southern District of New York, Kyle Davies, co-founder of Three Arrows Capital (3AC), a bankrupt crypto hedge fund, declared that he is solely a citizen of Singapore and not the United States. Davies submitted notarized and Apostilled copies of the form renouncing his U.S. citizenship, stating that he obtained Singaporean citizenship in January 2021 and does not accept the jurisdiction of U.S. courts.
Davies explained that he decided to renounce his U.S. citizenship due to Singapore’s prohibition on dual nationality. After marrying a Singaporean national in 2017 and acquiring permanent residency, he made the choice to relinquish his U.S. citizenship. The documentation provided by Davies shows that he renounced his citizenship at the U.S. Embassy in Singapore in December 2020.
The submission of this filing follows a subpoena issued to Davies and his co-founder, Su Zhu, by 3AC liquidators seeking information regarding the collapse of the crypto hedge fund. While Zhu, a Singaporean national, would likely be exempt from the subpoena if residing outside the U.S., Davies has been accused of contempt of court for disregarding the order. However, Davies argues that as a non-U.S. citizen since before the commencement of the case, he cannot be validly served with process, asserting that the court lacks personal jurisdiction over him.
The revelation of Davies’ lack of U.S. citizenship could complicate the legal proceedings surrounding the bankruptcy of 3AC. Liquidators are attempting to recover approximately $1.3 billion from Zhu and Davies, as the firm reportedly owes creditors $3.5 billion. The bankruptcy court has scheduled a hearing on August 8 to address this matter.
Amidst public outcry over the events leading to 3AC’s collapse, Zhu and Davies launched Open Exchange, a platform for trading claims against bankrupt crypto companies. Sotheby’s has also auctioned off pieces from a non-fungible token (NFT) collection formerly owned by the co-founders of 3AC.
This development raises questions about the jurisdictional complexities arising from international citizenship and its implications in legal disputes. Additionally, it emphasizes the need for regulatory oversight in the cryptocurrency industry to prevent financial mismanagement and protect investors’ interests.