In a recent development in the bankruptcy case of Three Arrows Capital (3AC), a crypto hedge fund that has ceased operations, a judge has rejected a request to hold co-founder Kyle Davies in contempt of Court and impose sanctions. The judge cited the fact that Davies, who is not a US citizen and resides outside the country, was not properly served with a subpoena issued by the United States Bankruptcy Court for the Southern District of New York.
Judge Martin Glenn made this ruling in a filing on August 11, stating that previous rulings did not account for Davies’ non-US citizenship and residence. He highlighted that applicable federal laws for compelling compliance outside the US should have been considered. Glenn noted that the court had been operating under the presumption that Davies was a US national and that personal jurisdiction might be established at some point. However, due to Davies’ citizenship status, the court did not have the authority to serve him the subpoena.
The judge suggested that foreign representatives may pursue legal action in Singaporean courts to enforce compliance from Davies, as the US court does not have significant jurisdiction over him. The contempt motion against Davies was rejected.
In a related filing to the bankruptcy court, Davies submitted documents that renounced his US citizenship on December 15, 2020, and provided evidence of obtaining citizenship in Singapore in January 2021. He clarified that he would not be under the jurisdiction of US courts and explained that dual nationality is not allowed in Singapore.
Davies further stated that he has been residing in Singapore permanently since renouncing his US citizenship and has a Singaporean spouse and two children. Court records confirm that Davies renounced his US citizenship at the US Embassy in Singapore.
Davies has complied with a subpoena from 3AC’s liquidators, who are investigating the downfall of the crypto hedge fund. His co-founder, Su Zhu, who is also a co-founder of 3AC, is exempt from the requirements of the subpoena as a citizen of Singapore and a non-US resident. However, Davies has legal representation in the bankruptcy court hearings, and his lawyers have disclosed Su Zhu’s Singaporean address in their submissions.
This latest ruling highlights the complexities of international jurisdiction in the context of cryptocurrency-related legal cases. As the 3AC bankruptcy case progresses, it remains to be seen how the involvement of foreign representatives and enforcement in Singaporean courts will proceed.