Polygon (matic) 
Bryan Pellegrino, LayerZero’s co-founder and CEO, has publicly accused Three Arrows Capital (3AC) co-founder Kyle Davies of trying to pressure the company to move its entire treasury to the now-defunct crypto hedge fund right before its bankruptcy. These allegations surfaced after Pellegrino responded to a post on X. In his response, he claimed Davies offered “better rates than other borrowers” in a desperate attempt to salvage the hedge fund before its downfall.
Pellegrino sharply criticized Davies for his deceitful behavior. “Getting liquidated is one thing. Lying and exploiting…is another,” he wrote.
The recent allegations follow Davies’s appearance on a March 19 episode of the Unchained Podcast. In the discussion, Davies didn’t seem remorseful about 3AC’s bankruptcy. He laughed off the notion that his failure was something he deeply regretted, implying that bankruptcies are very common within the crypto industry. Davies maintained that his professional reputation is unblemished, regardless of the serious criticism he has received for his conduct before and after to the downfall of 3AC. He revealed that he was meeting with the fund’s creditors and had also consulted with Teneo, the 3AC liquidator. Davies remained optimistic about the situation, noting that they might soon reach a settlement fair for all parties.
On Dec. 21, Teneo obtained a court order in the British Virgin Islands to freeze $1.14 billion in Davies and Zhu’s assets. The liquidator is trying to recover the $3.3 billion that they owe creditors after 3AC went bankrupt. The firm specifically targeted Zhu and Davies for $1.3 billion, accusing them of recklessly leveraging investor funds after the hedge fund became insolvent.
Davies defended 3AC’s investment tactics, blaming their high-risk business practices on his unshakable belief in a long-term bull market. He has accused the media of exaggerating the fund’s troubles and pointed fingers at lenders for irresponsibly investing their clients’ funds in high-risk schemes. 3AC fell during a crypto market slump as it was unable to meet creditor demands. The firm went from managing $10 billion in assets in 2021 to filing for bankruptcy in July 2022. By April 2022, the value of all 3AC assets had dropped to $3 billion, continuing to fall until the declaration of bankruptcy.
Post-collapse, Davies and 3AC’s other co-founder, Su Zhu, embarked on a new venture with the launch of Open Exchange (OPNX), a crypto derivatives and claims trading platform. However, the operation was short-lived, and all operations shut down in February 2024. Davies and Zhu have faced subpoenas from Singaporean authorities for avoiding communication with authorities and not cooperating with the liquidation process. Zhu was later arrested in Singapore for failing to cooperate with the liquidation inquiries, further complicating the situation.
