LayerZero co-founder and CEO, Bryan Pellegrino, has accused Kyle Davies, the founder of Three Arrows Capital, of attempting to convince LayerZero to transfer its entire treasury to the now-defunct crypto hedge fund just before its collapse. Pellegrino made this claim in response to a post on X, stating that Davies promised LayerZero better rates than other borrowers as a last-ditch effort before the collapse. Pellegrino further condemned Davies for deceiving and exploiting colleagues and partners. He stated, “Getting liquidated is one thing. Lying and exploiting your friends, portcos, and people around you is another.” In contrast, Davies refused to apologize for the losses suffered by investors in 3AC’s bankruptcy and the subsequent collapse, insisting that his professional reputation remained intact. He defended his actions, saying, “We were traders who devoutly believed in up only forever. Still do. Lenders chose to gamble their own low-risk client’s funds on a high-risk thesis.”
Davies has not yet responded to Pellegrino’s comments on X. Following the collapse of Terra in May 2022, 3AC filed for Chapter 15 bankruptcy in July of the same year due to liquidity issues. Davies and his co-founder Su Zhu launched Open Exchange (OPNX) in April 2023, a platform for crypto derivatives and claims trading. However, the platform ceased operations in February of this year. In January 2023, Davies and Zhu were summoned by X due to their lack of communication with relevant authorities and failure to cooperate with liquidators. Zhu was arrested in Singapore in September and imprisoned until December for non-cooperation in the liquidation inquiries of 3AC. Davies, on the other hand, managed to avoid apprehension. In an attempt to recover funds, a British Virgin Islands court froze $1.14 billion worth of assets belonging to Davies and Zhu on December 21. The liquidator of 3AC, Teneo, is seeking to recover $1.3 billion directly from Davies and Zhu, alleging that they took on significant leverage with investor funds after 3AC became insolvent.