The Monetary Authority of Singapore (MAS) has issued nine-year prohibition orders (POs) against the founders of Three Arrows Capital (3AC) over violations of the country’s securities rules.
MAS Issues Long-Term Ban on 3AC Founders
The orders, which took effect on September 13, will see Kyle Davies and Zhu Su barred from performing regulated activities and from engaging in the management of, acting as a director of, or becoming a substantial shareholder of any capital market services entity in Singapore.
Previously, in June 2022, MAS reprimanded 3AC for providing misleading information, exceeding the assets under management (AUM) threshold allowed for registered fund managers, and failing to notify the central bank about changes to Su’s and Davies’ directorship and shareholdings.
After further investigating the 3AC and its founders, MAS said it found that the company had committed further violations of the country’s securities rules between August 2020 and January 2022.
Additional Securities Violations
These additional violations include failure to notify MAS of the employment of a new business representative, providing false information to the central bank, and failure to implement a proper risk management framework.
Specifically, MAS said 3AC employed Cheong Jun Yoong Arthur as a portfolio manager between August 2020 and September 2021 but failed to notify the regulator within the required timeframe of Cheong’s employment.
“MAStakes a serious view of Mr Zhu’s and Mr Davies’ flagrant disregard of MAS’ regulatory requirements and dereliction of their directors’ duties. MAS will take action to weed out senior managers who commit such misconduct,” Loo Siew Yee, MAS’ assistant managing director for policy, payments and financial crime said.
3AC was one of the prominent cryptocurrency hedge funds before going bankrupt last year after failing to meet margin calls from its lenders. The firm’s collapse was mainly triggered by its significant exposure to TerraUSD and Luna token, which crashed to zero in May 2022.
Court filings revealed that the hedge fund owes approximately $3.5 billion to 27 creditors, including Voyager Digital, Genesis Global Trading, and Blockchain.com.
