Singapore Central Bank Censures Three Arrows Capital for Alleged Misleading and False Disclosures

Singapore's central bank, the Monetary Authority of Singapore (MAS), reprimanded embattled crypto hedge fund Three Arrows Capital for misleading it with allegedly false information.

• The hedge fund, which is also known as 3AC, failed to disclose ownership information and exceeded the threshold set for assets under management, the regulator said in a statement published on Thursday.
• 3AC was allowed to manage funds for 30 investors up to S$250 million ($180 million) when it registered as a fund management company in Singapore in 2013. The fund, however, exceeded its allowed assets under management for a prolonged period; between July and September 2020 and November 2020 and August 2021, the central bank said.
• The firm had notified MAS that it had transferred the management of its fund to an unrelated British Virgin Islands entity starting September 2021. But this representation was misleading because it failed to disclose that Zhu Su, co-founder of 3AC, was a common shareholder in both entities and served as a director in the Singapore company, MAS said.
• The hedge fund also didn't notify the regulator of changes in directorships and shareholding positions for its directors and co-founders, Su and Kyle Davies, within the required timeline, the statement said.
• The fund, founded in Singapore in 2012, has seen heavy losses during a market rout that has had bitcoin BTC$88,701.02 hovering at around $20,000 in recent weeks, down from nearly $69,000 last November.
• Three Arrows Capital was reported as possibly insolvent mid-June after it incurred at least $400 million in liquidations. British Virgin Islands ordered 3AC's local entity to liquidate on Wednesday.
• The fund also said it was moving to Dubai in May, but CoinDesk couldn't find any evidence that it had set up in the emirate in June.
• 3AC didn't immediately respond to request for comment.
• The crisis at 3AC has leaked into other crypto firms such as crypto broker Voyager Digital (VOYG), which issued a default notice on Monday, after the fund failed to meet its loan obligations. VOYG shares fell 60% when it disclosed its exposure to the hedge fund last week, totaling 15,250 bitcoins ($293 million) and $350 million USDC.

Read more: FSInsight Accuses Three Arrows Capital of Running a ‘Madoff-Style Ponzi Scheme’

UPDATE (June 30, 10: 55 UTC): Updates headline and lead paragraph. Adds additional information in second, third and fourth bullet and background information in seventh and ninth bullet.