CEO alleges Davies’ request for treasury allocation led to 3AC’s downfall

Bryan Pellegrino, co-founder and CEO of LayerZero, has accused Kyle Davies of Three Arrows Capital of attempting to convince LayerZero to transfer its entire treasury to the now-defunct crypto hedge fund shortly before its collapse. Pellegrino made the claim in response to a post on Thursday, alleging that Davies offered LayerZero better rates than other borrowers in a last-ditch effort before the collapse. Pellegrino criticized Davies for dishonesty and taking advantage of those around him. Davies has not responded to Pellegrino’s posts.

Three Arrows Capital (3AC), a prominent crypto hedge fund manager with over $3 billion in assets, filed for bankruptcy in July 2022 following the collapse of Terra Luna. In April 2023, Davies and co-founder Su Zhu launched Open Exchange (OPNX), a platform for crypto derivatives, but it ceased operations earlier this year. In January 2023, Davies and Zhu were subpoenaed for their lack of cooperation with liquidators. Zhu was arrested in Singapore in September and was imprisoned until December for non-cooperation. Davies stated in a recent podcast that he avoided Singapore to evade potential imprisonment. A court in the British Virgin Islands has frozen $1.14 billion worth of Davies and Zhu’s assets, and the 3AC liquidator Teneo is seeking to recover $1.3 billion directly from them, alleging that they took on significant leverage with investor funds after 3AC became insolvent.