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During a virtual hearing for the Southern District of New York Bankruptcy Court on December 02, 2022, Judge Martin Glenn stated that the liquidators for 3AC (Three Arrows Capital) will have to present necessary documents for granting the permission to subpoena the now-bankrupt crypto hedge fund’s founders via Twitter.
The financial documents would help liquidators to locate funds and settle claims with the creditors of the bankrupt hedge fund.
The Statement by Legal Team
While the legal team for 3AC liquidators asserted founders for changing blame to FTX. At the time of hearing, lawyers for 3AC’s liquidators mentioned founders Zhu Su and Kyle Davies for being “active and responsive to comments via Twitter” but “repeatedly fail[ing] to engage” with liquidators to discuss the company’s assets and related issues.
The legal team said Mr. Zhu and Mr. Davies have only had “limited discussions” with liquidators in addition to changing jurisdictions often. According to a report they are traveling to Bali and the United Arab Emirates.
Adam Goldberg, a lawyer with Latham and Watkins representing 3AC liquidators via advisory firm Teneo, said the founders had the conversation with the reporters of CNBC and Bloomberg “in an apparent effort to rehabilitate their reputations.”
Mr. Goldberg stated that “Since the collapse of FTX, Mr. Davies has appeared on CNBC and both of the founders have been very active on Twitter, calling out FTX and advancing the theory that FTX caused the debtors’ collapse. It’s interesting, to say the least, that the first time we’ve heard this theory that FTX caused the downfall of this debtor was after FTX’s own sensational collapse.”
He also pointed to “ironic” behavior from both Mr. Zhu and Mr. Davies, who have tweeted calls to former FTX CEO Sam Bankman-Fried to “reveal the truth” while seemingly sidestepping responsibility for 3AC creditors.
3AC Founder’s Response
On December 03, 2022, the 3AC Founders shared the tweet and mentioned that “Unfortunately their Liquidators seem to refuse to engage them constructively. After months, cash in a bank account, minimal asset sales, there have still been no disbursements to creditors.”
The founders also stated to have an open conversation with all creditors to find a better way forward.
The 3AC founders invited the Liquidators to engage with them positively, constructively, and without threats, that would be in the best interest of creditors.
Nancy J. Allen is a crypto enthusiast, with a major in macroeconomics and minor in business statistics. She believes that cryptocurrencies inspire people to be their own banks, and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning. She frequently researches, and posts content on the top altcoins, their theoretical working principles and technical price predictions.
