Three Arrows Capital Caught Lying to Singapore Authorities

Timothy Craig

Jun. 30, 2022

The distressed hedge fund reportedly misled the Monetary Authority of Singapore over the firm’s management and ownership.

Three Arrows Capital Caught Lying to Singapore Authorities

Cover artwork by Papapig, Three Arrows Capital, MAS (edited by Mariia Kozyr)

Key Takeaways

The Monetary Authority of Singapore has reprimanded the troubled crypto hedge fund Three Arrows Capital.
The MAS has alleged that Three Arrows Capital misled the agency over its ownership, management, and assets under management.
The scrutiny from the MAS comes as Three Arrows Capital grapples with insolvency.

The Monetary Authority of Singapore has reprimanded Three Arrows Capital for providing false ownership information and exceeding the country’s permitted assets under management threshold.

MAS Reprimands Three Arrows Capital

Three Arrows Capital is in hot water with authorities in Singapore.

The Singapore-based hedge fund, co-founded in 2012 by classmates Su Zhu and Kyle Davies, has been reprimanded by the Monetary Authority of Singapore (MAS) for providing false and misleading information.

A Thursday media release from the MAS has accused Three Arrows Capital of deliberately misleading the agency over its management and ownership. According to the release, the fund transferred management to an unrelated offshore entity on Sep. 1, 2021. However, this new entity was also partly owned by Three Arrows’ Zhu, a fact that the fund did not disclose to Singapore authorities.

Additionally, the MAS has stated that Three Arrows failed to inform the agency of changes in the directorships and shareholdings of Zhu and Davies in a timely fashion. The release also states that the fund breached the permitted assets under management threshold of around $179 million for registered fund management companies on two separate occasions. At its peak, Three Arrows is estimated to have held assets valued at upwards of $10 billion.

The scrutiny from the MAS comes as Three Arrows grapples with an insolvency crisis. On Wednesday, the fund was ordered by a British Virgin Islands court to liquidate its assets in order to pay back its creditors. While the full extent of Three Arrows’ debt is still unknown, crypto exchange Voyager Digital recently revealed that the fund had defaulted on a $665 million debt consisting of 15,250 Bitcoin and $350 million worth of the USDC stablecoin.

While the MAS has currently only reprimanded the firm for minor violations, the media release leaves the door open to further action. “In light of recent developments which call into question the solvency of the fund managed by [Three Arrows Capital], MAS is assessing if there were further breaches of MAS’ regulations,” the agency said.

Disclosure: At the time of writing this piece, the author owned ETH and several other cryptocurrencies.

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