Kyle Davies Defends Three Arrows Capital Bankruptcy
In a recent interview on the latest episode of Unchained, Kyle Davies, the founder of collapsed crypto hedge fund Three Arrows Capital (3AC), defended his actions and expressed no remorse for the company’s bankruptcy. Davies argued that bankruptcies are a common occurrence in the business world and that it’s more important to focus on how to learn from these experiences and improve in the future.
Company Bankruptcies Are Common
Davies responded to criticisms regarding his lack of remorse by stating that bankruptcies are a natural part of the business cycle and that almost every company goes bankrupt at some point. He emphasized that what matters is how you handle the situation and what you do to add value and improve in the future. According to Davies, even if Three Arrows Capital went bankrupt, they can still provide insights and guidance to future companies to help them avoid similar pitfalls.
Avoiding Punishment
Davies confirmed that he will not be returning immediately to Singapore, where 3AC is headquartered. Singaporean authorities expect Davies to serve the same four-month jail sentence that his co-founder Zhu served at the end of last year. However, Davies hinted that he is looking for ways to avoid punishment and mentioned the possibility of settlements. He believes that these matters will eventually resolve themselves.
Current Whereabouts
Davies revealed that he is currently in Europe but declined to confirm whether he is still in Portugal, where he was reportedly located last month. This adds a level of uncertainty to his current situation and whereabouts.
The Rise and Fall of Three Arrows Capital
Three Arrows Capital was founded by Kyle Davies and Su Zhu in 2012 as a hedge fund specializing in arbitrage trading of forex derivatives. The company initially operated in Singapore but later shifted its focus to crypto trading in 2017. Davies renounced his US citizenship to become a Singapore citizen around the same time.
The Collapse of Terra
In May 2022, a major crypto project called Terra experienced a collapse when its dollar-pegged stablecoin UST lost its peg and plummeted in value. The project had sold UST tokens with the promise of maintaining a peg to the USD through the burning of a sister token called LUNA. However, on May 7, $2 billion worth of UST was withdrawn after interest rates for earning yield through Anchor protocol declined.
This sudden exodus led to a death spiral for Terra’s ecosystem, causing billions more to leave in the following days. Three Arrows Capital held a significant number of LUNA tokens at the time of Terra’s collapse, resulting in substantial losses for the company.
Bankruptcy Proceedings
In mid-June, Three Arrows Capital announced significant losses due to its exposure to Terra. By July 1, the company had filed for Chapter 15 bankruptcy proceedings. The fallout from Terra’s collapse affected numerous other crypto companies, including lenders like Celsius, Vauld, and Voyager, as well as exchanges such as FTX. This bankruptcy became one of the largest in crypto history.
Failed Bankruptcy Claims Exchange
Davies and Zhu attempted to launch a bankruptcy claims exchange but encountered difficulties with Dubai regulators, leading to the cessation of operations. This venture aimed to provide a platform for creditors and investors affected by bankruptcies to trade their claims and potentially recover some funds.
Hot Take: Kyle Davies Stands Firm
Kyle Davies, the founder of Three Arrows Capital, has refused to apologize for the company’s bankruptcy. He believes that bankruptcies are a normal part of the business world and that the focus should be on learning from these experiences and improving in the future. While facing potential legal consequences, Davies remains optimistic that these matters will eventually be resolved. The rise and fall of Three Arrows Capital serve as a reminder of the risks and challenges within the crypto industry.
Source: Cryptonews
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