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- 1 The Monetary Authority of Singapore (MAS), the central bank, prohibited the founders of Three Arrows Capital for 9 years from the trading market.
- 2 Three Arrows Capital, a Singapore-based cryptocurrency hedge fund, was ordered to liquidate by court.
Three Arrows Capital, a hedge fund manager offering risk-adjustment returns is banned by Singapore’s MAS. MAS, the central bank of Singapore proposes to promote sustained non-inflationary economic growth. The regulators banned the founders of Three Arrows Capital for 9 years from the trading market.
Reason Behind the Prohibition
Before knowing what actually happened, it is crucial to know about the functioning of Three Arrows Capital. Three Arrows Capital, a Singapore-based cryptocurrency firm was founded by Kyle Davies and Su Zhu in 2012. The private firm was operating in the Hedge Fund sector heavily engaged in arbitraging emerging-market foreign-exchange derivatives. The firm was considered to be one of the biggest crypto firms to go bankrupt in 2022.
On 27 June 2022, the company was ordered to liquidate by the court in the British Virgin Islands. In addition to this, MAS has issued a 9-year prohibition order against the founders of Three Arrows Capital, Kyle Davies and Su Zhu. Both of them are prohibited from performing any regulated activity taking part in trading or acting as a part of the management. Kyle Davies and Su Zhu have no permission to act like a director, substantial shareholders, capital market services firms, or any related accountability.
The decision is made after the appropriate investigation by Singapore’s regulatory authorities. In June 2022, Three Arrows Capital offered false information to the community and the roles of Kyle Davies and Su Zhu as well. The firm also failed to inform the appointment of the new fund manager to the MAS.
Furthermore, they falsely claimed that the manager wasn’t involved in conducting the regulated activities and hadn’t provided any appropriate risk management framework. Considering all these factors in mind, an investigation is conducted by Singapore’s MAS.
What Next?
“MAS took Zhu and Davies’s actions seriously and found them inappropriate as per the financial rules and regulations”, stated Loo Siew Yee, Assistant Manager Director of Policy, Payments, and Financial Crime. According to Loo, it is the responsibility of the senior management of fund managers to come up with appropriate risk management measures to safeguard the interests of investors. As a result of this, both the founders are barred for 9 years from every action related to trading or management along with a fine that remains unpaid.
In August, Kyle Davies and Su Zhu’s latest venture claims exchange, OPNX, registered in Seychelles was fined around $2.8 Million by Dubai’s Virtual Assets Regulatory Authority (VARA).
Conclusion
The copy of the notice issued by MAS on September 14 states the prohibition of Kyle Davies and Su Zhu from all management-related roles for 9 years. Kyle Davies and Su Zhu, the founders of Three Arrows Capital failed to offer relevant information to the community about their roles as well as haven’t provided any appropriate risk management framework. This resulted in Kyle Davies and Su Zhu being fined with around $2.8 Million.
With a background in journalism, Ritika Sharma has worked with many reputed media firms focusing on general news such as politics and crime. She joined The Coin Republic as a reporter for crypto, and found a great passion for cryptocurrency, Web3, NFTs and other digital assets. She spends a lot of time researching and delving deeper into these concepts around the clock, and is a strong advocate for women in STEM.
