April 19, 2024
Latest Cryptocurrency News

LayerZero CEO Accuses Three Arrows Capital Amid Crypto Fund Collapse

LayerZero co-founder and CEO Bryan Pellegrino has leveled accusations against Kyle Davies of Three Arrows Capital (3AC), alleging attempts to persuade LayerZero into transferring its treasury to the now-defunct hedge fund just before its collapse.

Pellegrino’s allegations surfaced in response to a post on X, where he claimed Davies promised LayerZero “better rates than other borrowers” in a last-minute effort before 3AC’s downfall. Pellegrino condemned the act, stating:

“Getting liquidated is one thing. Lying and exploiting your friends, portcos, and people around you is another.”

Unyielding Stance Amidst Financial Fallout

In an Unchained Podcast episode, Davies refused to apologize for the losses incurred during 3AC’s bankruptcy, maintaining his professional reputation despite social media backlash. Davies defended 3AC’s trading philosophy, asserting, “We were traders who devoutly believed in up only forever. Still do.” However, Pellegrino countered, criticizing Davies for misleading and taking advantage of associates and partners, alleging financial instability during the proposed arrangement with LayerZero.

Legal Turmoil and Asset Freeze

Following Terra’s collapse in May 2022, 3AC, which manages over $3 billion in assets, filed for Chapter 15 bankruptcy in July of the same year due to liquidity issues. Davies and Su Zhu, 3AC co-founders, founded Open Exchange (OPNX) in April 2023, which halted operations in February of this year.

On January 5, 2023, Davies and Zhu faced subpoenas for lack of cooperation with liquidators. Zhu’s arrest in Singapore last September and subsequent imprisonment, coupled with Davies evading apprehension, further complicated matters. A British Virgin Islands court froze $1.14 billion of Davies and Zhu’s assets on December 21, with the 3AC liquidator, Teneo, seeking to recover $1.3 billion directly from them, alleging significant leverage misuse with investor funds post-insolvency.

These developments underscore the challenges and controversies within the cryptocurrency industry, emphasizing the importance of transparency and ethical conduct amidst financial uncertainty.

Image by pch.vector on Freepik

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