3AC’s Kyle Davies tried to lure LayerZero to entrust entire treasury days before collapse, CEO Pellegrino claims
Kyle Davies, co-founder of Three Arrows Capital, attempted to lure LayerZero to allocate the project’s entire treasury to the now-defunct crypto hedge fund just days before it imploded, LayerZero Co-Founder and CEO Bryan Pellegrino alleged on X Thursday.
Davies, who refused to apologize to investors for billions lost in 3AC’s bankruptcy in a recent podcast interview, reiterated his unapologetic view on the hedge fund’s collapse in an X post Thursday. “We were traders who devoutly believed in up only forever. Still do. Lenders chose to gamble their own low risk clients funds on a high risk thesis,” Davies wrote.
Pellegrino threw his allegation in a reply to that X post, claiming that Davies promised the interoperability protocol LayerZero “better rates than other borrowers” in a “last gasp effort” before the collapse. “Getting liquidated is one thing, lying and exploiting your friends, portcos, and people around you is another,” said the LayerZero chief.
Pellegrino also claimed that 3AC was insolvent when it offered the deal to LayerZero. Davies did not reply to Pellegrino’s X posts as of publication time.
3AC Implosion
3AC, once a prominent hedge fund manager in the crypto sector that managed assets over $3 billion, filed for Chapter 15 bankruptcy in July 2022 after running into liquidity issues following the collapse of Terra-Luna in May of that year.
Its co-founders Davies and Su Zhu moved on to launch Open Exchange, or OPNX, a crypto derivatives and claims trading platform in April 2023. However, the platform closed down earlier this year in February.
While Zhu was arrested in Singapore last September and remained imprisoned until December for failing to cooperate with investigations related to 3AC’s liquidation, Davies was not apprehended as he remained outside of the city-state. Davies said in a recent podcast interview that he would actively avoid returning to Singapore to dodge jail time.
