Singapore’s Central Bank Bans Founders of Three Arrows Capital

gemini’s-discontent-with-genesis’-bankruptcy-resolution:-an-in-depth-analysis Three Arrows Capital

Singapore’s Monetary Authority (MAS) has acted decisively against Kyle Davies and Su Zhu, co-founders of the crypto hedge fund, Three Arrows Capital (3AC). Both individuals face a nine-year prohibition for alleged breaches of the nation’s securities laws.

Details of the Three Arrows Capital Founders’ Prohibition

Effective September 13, Davies and Zhu are barred from participating in any regulated activities. Additionally, their roles within the capital market services sector face strict limitations. Neither individual can manage, serve as a director, or hold a significant share in any such Singapore-based enterprise.

Delving deeper into the affairs of 3AC and its founders, MAS discovered additional contraventions of securities regulations. Among these, the central bank highlighted the duo’s failure to:

  1. Inform MAS of a new business representative appointment.
  2. Provide accurate data to the regulatory authority.
  3. Establish a sound risk management framework.
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Loo Siew Yee, the Assistant Managing Director of Policy, Payments, and Financial Crime at MAS, commented on the matter. “MAS is stringent about regulatory compliance. The transgressions of Mr. Zhu and Mr. Davies cannot be overlooked. Such misconduct from senior managers will be rooted out,” she asserted.

Previous Reprimands and 3AC’s Bankruptcy

It isn’t the duo’s first encounter with regulatory pushback. In June, just a day before 3AC declared bankruptcy, MAS censured the fund. Their offenses? Supplying false details to the regulator, concealing directorship shifts involving Zhu and Davies, and surpassing the allowable assets under the management threshold.

The fund’s downfall can be traced back to the previous year’s tumultuous crypto market dynamics. An upheaval led by the Terra ecosystem’s failure left 3AC vulnerable. Their highly leveraged crypto stances resulted in considerable loan defaults, magnifying their financial woes.

Recovering Massive Debts

Creditors’ claims paint a grim picture for Three Arrows Capital. The firm purportedly owes a staggering $3.5 billion. Meanwhile, liquidators are on a quest to reclaim approximately $1.3 billion from the co-founders, Zhu and Davies. Allegations suggest that this debt was accumulated even when 3AC teetered on the brink of insolvency.

In this ever-evolving financial landscape, regulatory bodies worldwide continue to ensure that market participants maintain the highest standards of integrity. MAS’s recent actions reinforce the importance of adherence to rules and the consequences of failing.

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