LayerZero CEO Accuses Three Arrows Capital Co-Founder of Misleading Practices
LayerZero co-founder and CEO Bryan Pellegrino accused Kyle Davies, co-founder of the now-defunct Three Arrows Capital (3AC), of trying to persuade his firm to transfer its entire treasury shortly before the liquidation of 3AC on March 21. Pellegrino made the allegation in an X post as a response to Davies’ comment on a podcast.
Pellegrino Asserts Davies Misled & Exploited Partners
- Pellegrino alleged that Davies tried to get the entire treasury of LayerZero, “promising better rates than other borrowers as a last-gasp effort.”
- The LayerZero CEO further claimed that 3AC resolved to borrow funds from various firms, even though the firm knew it was financially unable to pay back the loans amid private preparation for its liquidation.
Pellegrino criticized Davies for misleading and taking advantage of friends, associates, and partners, including Arthur Hayes, the co-founder of BitMex exchange.
The Fall of Three Arrows Capital & Impacts on the Crypto Sphere
Davies and Su Zhu started 3AC in 2012, and the fund reportedly managed an estimated $10 billion in assets as of 2021. But, the value dropped to $3 billion in April 2022. The major fall in the fortunes of 3AC was attributed to the crash of TerraUSD stablecoins in 2022, which led to a crypto crash that wiped out billions in value.
The now-defunct hedge fund filed for Chapter 15 bankruptcy on July 1, 2022, to protect its assets from creditors. The 3AC collapse had a severe impact on several investors and companies. The bankruptcy filing noted that the hedge fund owed $3.5 billion to 27 companies, including $2.3 billion to Genesis Global Trading.
Additionally, crypto trading platform Blockchain.com faced a $270 million hit on loans to 3AC, while renowned digital asset brokerage Voyager Digital filed for Chapter 11 bankruptcy due to a default on about $670 million in loans made to 3AC.
Ian is a cryptocurrency enthusiast blending humor with professionalism. With an engineering background and a storyteller's heart, he simplifies the blockchain world with sharp analysis and a touch of wit. At Cryptowire, he brings his unique perspective to make digital financial innovation accessible to all.
