Legal Twist: Three Arrows Capital Co-Founder’s Citizenship Renunciation Disrupts Court’s Jurisdiction in Bankruptcy Case

Hassan Shittu
Last updated: | 2 min read
Source: Shutterstock

In the bankruptcy case of Three Arrows Capital (3AC), a crypto hedge fund that ceased operations, a judge has rejected a request to hold co-founder Kyle Davies in contempt of Court and impose sanctions.

Judge Martin Glenn, in a filing on August 11 at the United States Bankruptcy Court for the Southern District of New York, stated that previous rulings regarding a subpoena issued to Davies through X (formerly Twitter) did not account for the fact that Davies, a co-founder of 3AC, is not a US citizen and resides outside the country. 

He cited applicable federal laws for compelling compliance outside the US. 

“Until Mr Davies filed his Opposition, the Court was operating under the presumption that Mr Davies was a United States national and that personal jurisdiction might be established at some point if that presumption continued to hold and other jurisdictional facts were proven,” said Glenn. 

“Because Mr Davies’ United States citizenship was a prerequisite for valid service on him in the manner effected, he was not properly served with the subpoena issued by this Court.”

The judge suggested foreign representatives might use Singaporean courts to force Davies to comply. He rejected the contempt motion, stating that the US court couldn’t exert much jurisdiction over Mr. Davies.

Davies Renounces US Citizenship and Asserts Non-Residency in 3AC Bankruptcy Court Filing

Copy of 3AC Kyle Davies Singapore passport Source: U.S. Bankruptcy Court for the Southern District of New York

On August 1, Davies submitted notarized and Apostilled copies of the form renouncing his US citizenship on December 15, 2020, to the US Bankruptcy Court for the Southern District of New York. 

He stated that he obtained citizenship in Singapore after receiving a passport in January 2021 and clarified that he would not be under the jurisdiction of US courts.

“Davies has not been, and cannot be, validly served with process as a non-party in this case because he has not been a United States citizen or resident since well before this case was commenced,” said an August 1 filing. 

“Since Davies has not been validly served, the Court does not have personal jurisdiction over him. The Service Order and Compel Order were premised on the incorrect presumption that Davies is a US citizen, and therefore they should be vacated.”

According to court records, Davies renounced his US citizenship at the US Embassy in Singapore, citing his intention to reside in Singapore permanently.

He explained that he married a Singaporean national in 2017, obtained permanent residency, and now has two children in Singapore.

He renounced his US citizenship, as dual nationality is not allowed in Singapore.

Davies has furnished documents in compliance with a subpoena from 3AC’s liquidators, who seek details regarding the crypto hedge fund’s downfall

In January, Davies and fellow 3AC co-founder Su Zhu were publicly summoned via X due to their undisclosed locations.

 Su Zhu, a citizen of Singapore, is not bound by the subpoena’s requirements owing to his non-U.S. residency.

Nevertheless, Davies has legal representation in the bankruptcy court hearings. In documents dated August 1, Davies’ legal representatives disclosed Su Zhu’s Singaporean address.