LayerZero Co-Founder Alleges Three Arrows Capital Attempted Treasury Lure Before Implosion

LayerZero Co-Founder Alleges Three Arrows Capital Attempted Treasury Lure Before Implosion

Crypto News – Allegations surfaced on Thursday against Kyle Davies, co-founder of Three Arrows Capital, suggesting that he tried to entice LayerZero into allocating its entire treasury to the now-defunct crypto hedge fund just days before its collapse. Bryan Pellegrino, Co-Founder and CEO of LayerZero, made these accusations.

In a recent podcast interview, Davies remained unapologetic regarding the billions lost in 3AC’s bankruptcy, reiterating his stance on the collapse in a subsequent online post. “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,” wrote Davies.

Pellegrino responded to Davies’ post, alleging that Davies had promised LayerZero “better rates than other borrowers” in a desperate attempt just before the collapse. He condemned this behavior, stating, “Getting liquidated is one thing, lying and exploiting your friends, portcos, and people around you is another.”

Pellegrino further asserted that 3AC was insolvent when it proposed the deal to LayerZero. Davies has not responded to Pellegrino’s allegations at the time of publication.

The downfall of 3AC, once a significant hedge fund manager in the crypto sector with assets exceeding $3 billion, began with liquidity issues following the collapse of Terra-Luna in May 2022. Subsequently, in July 2022, 3AC filed for Chapter 15 bankruptcy.

Following the demise of 3AC, its co-founders, Davies and Su Zhu, ventured into launching Open Exchange (OPNX), a crypto derivatives and claims trading platform, in April 2023. However, the platform shuttered earlier this year in February.

While Zhu faced legal troubles, being arrested in Singapore in September and held until December for failure to cooperate with investigations related to 3AC’s liquidation, Davies remained outside of Singapore and expressed his intention to avoid returning to evade potential jail time, as mentioned in a recent podcast interview.