Crypto firm Three Arrows Capital faces MAS censure for giving false info, exceeding AUM limit

MAS signalled that its investigations into Three Arrows Capital, which started in June last year, are not over: PHOTO: ST FILE

SINGAPORE - Beleaguered Singapore-based crypto firm Three Arrows Capital is now facing censure from the Monetary Authority of Singapore (MAS) on top of its considerable financial woes.

Three Arrows, also known as 3AC, was reprimanded by the MAS on Thursday (June 30) for providing false information and for managing more assets than it was allowed to under Singapore rules.

The regulator listed three breaches by the crypto hedge fund relating to the Securities and Futures Act 2001 and the Securities and Futures (Licensing and Conduct of Business) Regulations.

The first was for providing misleading information. 3AC told the MAS it had moved the management of its fund to an unrelated offshore entity last September. But this representation was misleading as Mr Zhu Su, who is a 3AC co-founder and director, was a common shareholder of both 3AC and the offshore entity.

The second breach was 3AC's failure to notify the MAS of changes to directorships and shareholdings of Mr Zhu and co-founder Kyle Davies within a required timeline.

The third is that 3AC exceeded the assets under management (AUM) threshold of $250 million between July and September 2020 and between November 2020 and August 2021.

3AC, which obtained its registered fund management company status from the MAS in August 2013, was allowed to serve up to 30 qualified investors and manage assets of no more than $250 million.

Last September, 3AC transferred management of the only fund it managed to an offshore entity in the British Virgin Islands, where it is incorporated.

It resumed management of a portion of the fund's assets in February but told the MAS on April 29 that it intended to cease fund management activity in Singapore from May 6.

The MAS signalled that its investigations, which started in June last year, are not over: "In light of recent developments which call into question the solvency of the fund managed by 3AC, MAS is assessing if there were further breaches by 3AC of MAS regulations."

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