US Regulators Step Up Scrutiny of the Cryptoverse

• US regulators are investigating major players in the crypto verse
• Famous FTX and the infamous Three Arrows Capital are under investigation
• CFTC is investigating several possible market manipulations

According to Bloomberg, the SEC and CFTC are looking into Three Arrows Capital. The cryptocurrency hedge fund based in Singapore is under investigation by US regulators to determine whether it broke any of the regulations that hedge funds are required to follow.

Bloomberg talked to a few people who said that U.S. regulators might think 3AC could have been lying to clients about how strong its balance sheets were and not telling them why the fund wasn’t registered with regulators.

The Founders of Three Arrows Capital and the SEC 

Kyle Davies and Su Zhu gave an interview to Bloomberg at the end of July, breaking their silence regarding their alleged flight. After a British Virgin Islands court ordered the crypto investors to file for bankruptcy and liquidate all of 3AC’s assets, the investors argued that they were forced to hide from the public eye because they received multiple death threats.

During the interview, both founders made it clear that they had been in touch with relevant authorities “from day one,” despite being in unspecified locations.

However, the liquidation attorneys claim that none of the co-founders have cooperated.

Another Bloomberg report claims that the company in charge of liquidating 3AC’s funds, Teneo, had to obtain permission from a U.S. judge in order to notify the founders via email and Twitter because it was unable to contact them through the usual channels. 

Teneo has not yet received a response from any of the co-founders. The liquidators claim that despite the hedge fund’s implosion several months ago, Zhu and Davies have not fully cooperated with the investigation. 

Zhu and Davies have only communicated with the liquidators once in separate video conferences since their initial Zoom call in July.

ALSO READ: China Seeks To Reduce Dependence On Dollar

Regulators are watching Celsius Network 

FTX Celsius Network is another crypto company that went bankrupt after the Terra ecosystem crashed. However, regulators continue to investigate the real causes of its collapse months after its bankruptcy. 

It would appear that the CFTC is looking into a number of different possible ways to manipulate the market as well as the lack of transparency regarding how its clients’ funds are used. 

However, Celsius representatives are in fact collaborating with regulators, in contrast to 3AC. Separately, on October 14, 2022, the Director of the Enforcement Division at the Texas State Securities Board (TSSB), Joseph Rotunda, announced that he is conducting an investigation into FTX US for offering unregistered securities products in the United States, which could be in violation of state law.

Rotunda says that residents of the United States might be able to get unregistered securities in the form of yield-bearing accounts from FTX US. The TSSB Director created an account and downloaded the FTX US app.

He discovered that FTX, despite not being registered to provide such services, offers returns in ETH of up to 8% APY, which, in his words, looks like an investment contract.

Nancy J. Allen is a crypto enthusiast and believes that cryptocurrencies inspire people to be their own banks and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning.

Latest posts by Nancy J. Allen (see all)