Singapore Authorities Reprimands 3AC over Manipulation of Information Regarding Asset Management
- The MAS accused 3AC of providing wrong information and exceeding the peg limit for Assets Under Management (AUM) permitted for a Registered Fund Management Company (RFMC).
The crisis battling Cryptocurrency hedge fund, Three Arrows Capital (3AC) has taken a new dimension after Singapore Authorities reprimanded the firm due to the manipulation of information about assets under its management. The Monetary Authority of Singapore (MAS) reprimanded the company for faulting a part of its stipulations regarding assets management.
The MAS accused the firm of providing wrong information and exceeding the peg limit for Assets Under Management (AUM) permitted for a Registered Fund Management Company (RFMC).
Recall that around August 2013, 3AC gained approval from RFMC which aided it to engage in fund management business. One of the mandatory clauses of this permit states that any RMFC must not have more than 30 investors and a limit of S$250 million.
While applying for the permit, 3AC only revealed the assets under its management in a foreign organization in the British Virgin Islands around September 2021.
How 3AC floated regulations of the MAS
Also, around April 2022, 3AC informed the MAS of its plan to stop fund management operations in the country starting the following month. The query contains the failure of the firm for engaging in management activities before its proposal to suspend operations. The shortcoming of 3AC prompted the MAS to begin an investigation into its activities from June 2021.
Notably, the information before the MAS is accurate but findings revealed that both 3AC and the firm in the British Virgin Islands belong to Mr. Su Zhu, who dubs the director of 3AC. The firm erred after it failed to inform the MAS about a change of directors and shareholders.
3AC also failed to communicate with the MAS in due time about the changes. Currently, the MAS is investigating if the firm breached more of its stipulation.
Early this week, a leading cryptocurrency broker, identified as Voyager Digital issued a defaulting query to 3AC due to the firm’s failure to repay its loan. Voyager confirmed that the loan amounts to 15,250 bitcoin, which equals $324 million and about $350 million USDC.
The cryptocurrency broker revealed plans to ensure that it recovers the loan from 3AC. According to the report, Voyager Digital intended to consult its legal team to understand the legal perspectives of recovering its loan from the firm.
Also, a court in the British Virgin Islands declared the liquidation of the firm this week as well. 3AC plunged into liquidation due to the ongoing slum dip that has faced the crypto industry.
The foregoing resulted in uncertainty about how the firm will service its loans. The report revealed that the firm partners from Teneo in the British Virgin Islands are likely to handle the financial crisis of 3AC.
During an interview by the co-founder of 3AC, Kyle Davies with Street Journal early this month echoed the commitment of the firm to find a lasting solution to the crisis. He stated that the company is exploring every possible option to end the crisis, part of these options includes the sale of assets or a bailout by another firm.