US News
The co-founder of a failed cryptocurrency hedge fund that lost $3.5 billion of investors' money is smiling as he shows no remorse for losing money – as he remains on the run in an undisclosed location.
Kyle Davis, co-founder of bankrupt cryptocurrency hedge fund Three Arrows Capital (3AC), appeared on the Unchained podcast on Tuesday, claiming that he's not sorry for losing his investors' money because “every company goes bankrupt.”
“Am I sorry that a company goes bankrupt? No, just like companies go bankrupt, almost every company goes bankrupt, right? I'm sorry,” Davis cheekily told host Laura Chen.
“It's how you build it or what you do about it. We certainly do the best we can. We can add value in different ways. At the very least, we can even tell the next three darts how to do things better when they go bankrupt.”
Davies and his partner Su Zhou founded 3AC in 2012, and over time, they have raised billions from investors as cryptocurrencies began to capture the interests of millions around the world.
The Singapore-based hedge fund managed around $18 billion in crypto assets at its peak.
However, 3AC saw huge losses after the cryptocurrency market slumped in mid-2022 and for making large trades in coins like LUNA and Terra that failed to pan out, according to Capital.com.
The company then went bankrupt, and it was revealed that the hedge fund had borrowed money from more than 20 institutions and that the company owed billions to its investors.
3AC was first ordered to be wound up by a court in the British Virgin Islands, followed by courts in Singapore and the United States, to repay its investors.
However, both Davis and Chu fled and escaped.
Cho was arrested at Singapore's Changi Airport in September and sentenced to four months in prison for failing to coordinate with liquidators, but Davies managed to avoid arrest.
Davis said their sentences were a “surprise” for him and Chu. After his partner was arrested, it was discovered that they had missed their court date.
“Obviously, if we were going to not go to the court date, you wouldn't be in Singapore, right? But Cho was in Singapore,” Davies said.
“Since there is a court date, you will go. Otherwise, you will be in contempt of court.”
Davies, who is wanted in Singapore and faces the same sentence as his accomplice, said he had no plans to return to the country “immediately” but would consider doing so if the contempt order was dropped.
He said: “It is clear that these matters will be resolved at some point. There are settlements.” “These are common types of tactics, so I've learned…at the end of the day, all of these things work out.”
When Shane asked if he had fired his lawyers because they had not been informed of the court date, Davis said: “Maybe we should.”
Davies' location remains a mystery, although there has been speculation that he may be hiding in Portugal.
He became a naturalized citizen in Singapore after renouncing his US citizenship, according to CoinDesk.
In an interview with New York Magazine in February, he claimed to be “in Europe” but would not confirm whether he was residing in Portugal.
Shane then asked Davies if he was allowed to return to the United States to see his family. He said he had no reason to believe he would face consequences for doing so, but he did not.
Davies also spoke about the downfall of his startup OPNX, which he launched in Dube in April 2023.
Dubai's cryptocurrency regulatory authority has officially reprimanded OPNX for operating an unregulated exchange months after its launch. The exchange was closed in February, according to Coindesk.
The failure of 3AC and OPNX came around the same time as the fall of their prominent competitors, FTX and Binance.
Sam Bankman Freed, founder of FTX, was convicted of one of the largest financial frauds in history in 2023. He faces 40 to 50 years behind bars when he is sentenced on March 28.
Likewise, Changpeng Zhao was forced to step down as CEO of Binance after pleading guilty to anti-money laundering violations in November. He is scheduled to be sentenced on April 30.
Before Bankman-Fried's arrest, he blamed most of the 2022 cryptocurrency collapse squarely on Davies and Chu's firm 3AC.
“I suspect they may make up 80 percent of the total original infection,” the disgraced cryptocurrency trader told New York Magazine in 2022.
“They weren't the only people to explode, but they did it in a bigger way than anyone else. And they had a lot more confidence than the ecosystem before that.”
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