Authorities in Singapore are investigating troubled crypto hedge fund Three Arrows Capital, the country’s central bank announced Thursday.
The Monetary Authority of Singapore in a press release “reprimanded” Three Arrows for “providing false information” regarding its assets under management and said it suspected further foul play.
“In light of recent developments which call into question the solvency of the fund managed by TAC, MAS is assessing if there were further breaches by TAC of MAS’ regulations,” MAS said.
It was not immediately clear what punishment Three Arrows might face for having allegedly misled regulators. But the news comes just one week after Sopnendu Mohanty, chief fintech officer at MAS, said Singapore would be “brutal and unrelentingly hard” on crypto companies that engage in “market bad behavior.”
In recent weeks, Three Arrows, a onetime high-flying institution that evangelized for a “super-cycle” in crypto, has suffered heavy losses from major positions in Terra’s failed UST stablecoin, Grayscale Bitcoin Trust, and Lido’s staked ether.
The firm’s standing deteriorated even further Monday, when a court in the British Virgin Islands ordered its liquidation. The $10B fund will be taken over and its assets distributed among creditors by Russell Crumpler and Christopher Farmer of Teneo, a New York-based consulting firm appointed by the court.
Exceeded the Limit
Three Arrows, founded 10 years ago in Singapore, was a “registered fund management company,” according to the MAS, and allowed no more than 30 investors and 250M Singapore dollars ($180M) under management.
The MAS alleges Three Arrows exceeded its limit on assets under management twice: between July and September of 2020 and between November 2020 and August 2021.
The central bank also alleges Three Arrows gave it misleading information in April of this year, when the firm said it had, several months prior, “novated the management of the only fund it managed to an offshore entity in the British Virgin Islands.” In reality, MAS said, Three Arrows and the offshore entity “shared a common shareholder” in Three Arrows co-founder Su Zhu.
Co-founder Kyle Davies did not immediately return a message seeking comment.