Dubbing it a “shadow recovery method”, Kyle Davies, who co-founded the now-defunct crypto hedge fund Three Arrows Capital (3AC), is promising to direct a portion of income from his latest digital currency venture towards the creditors impacted by 3AC’s 2022 downfall.

Davies conveyed his intentions on a Twitter Space event on July 3, where he mentioned that directing potential earnings from Open Exchange (OPNX), his latest venture, to 3AC’s creditors would create positive “karma”. He described this unique reimbursement approach as a “shadow recovery method”, a parallel process to the official liquidation currently being handled by global consulting giant Teneo.

Emphasizing the uniqueness of this approach, Davies indicated it would enable him and his co-founder Su to transfer funds to 3AC’s creditors, conditional to their early support for OPNX. Davies stated that a number of creditors have already received compensation. He clarified that those not comfortable working with them were not required to do so.

He said, “We firmly believe that if we succeed and manage to communicate with the affected creditors, they stand to regain more of their investment. And if we fail and they flourish, that’s a good outcome. That’s positive karma, as one might call it.”

When questioned on his involvement in a fresh venture while his bankrupt hedge fund was in the midst of liquidation, Davies responded that creditors could only stand to gain from the new company.

However, OPNX hasn’t been without its controversies. Davies and Su came under fire following the announcement of OPNX’s launch on April 4, with certain segments of the crypto community accusing them of initiating a new venture while ignoring their responsibilities towards their collapsed hedge fund.

3AC declared bankruptcy under Chapter 15 on July 1, 2022. Subsequent court records uncovered that the fund is in debt to the tune of about $2.8 billion, payable to over 20 distinct firms.

Their present location is a mystery, with the legal authorities having to issue subpoenas via Twitter on January 5 due to difficulties in tracking them down. A recent report in the New York Times suggested that Davies and Su have predominantly been surfing in Bali.

In the most recent update on June 27, the liquidators announced their aim to recover a total of $1.3 billion in lost funds from Davies personally.