Bank: Crypto Hedge Fund Hosts More Assets in Singapore Than Allowed

The Monetary Authority of Singapore (MAS) reprimanded the embattled crypto hedge fund Three Arrows Capital for allegedly providing false information to it.

• In a statement released on Thursday, the regulator said that the hedge fund, also known as 3AC, didn't disclose ownership information and exceeded the asset threshold.
• When 3AC registered as a fund management company in Singapore in 2013, it was allowed to manage funds for 30 investors up to S$250 million ($180 million). The fund exceeded its allowed assets under management for a prolonged period between July and September 2020 and November 2020 and August 2021, the central bank said.
• The firm had informed MAS that it had transferred the management of its fund to an unrelated British Virgin Islands entity as of September 2021. However, this statement was deceptive because it failed to disclose that Zhu Su, co-founder of 3AC, was a common shareholder in both entities and served as a director in the Singapore company.
• The hedge fund didn't notify the regulator of changes in directorships and shareholding positions for its directors and co-founders, Su and Kyle Davies, within the required timeline.
• The fund, which was founded in Singapore in 2012, has suffered heavy losses during a market downturn that has seen bitcoin (BTC) hovering around $20,000 in recent weeks. It had been trading at nearly $69,000 last November.
• Mid-June, the liquidation of at least $400 million in assets by 3AC, which is based in the British Virgin Islands, was reported as possibly putting the company into insolvency. The local entity of 3AC was ordered to liquidate on Wednesday by the British Virgin Islands.
• CoinDesk did not find any evidence that the fund had set up in Dubai in June, despite the fact that it announced its move there in May.
• At the time of writing, 3AC had not responded to request for comment.
• The crisis at 3AC has spread to other crypto firms such as crypto broker Voyager Digital (VOYG), which issued a default notice on Monday, after the fund failed to meet its loan obligations. VOYG shares fell 60% when it disclosed its exposure to the hedge fund last week, totaling 15,250 bitcoins ($293 million) and $350 million USDC.

UPDATE (June 30, 10:55 UTC): Updated headline and lead paragraph. Added additional information in second, third and fourth bullet, and background information in seventh and ninth bullet.