Singapore Regulator Reproves Three Arrows Capital for Exceeding $250M Threshold

The Monetary Authority of Singapore (MAS) disclosed Thursday that it had reprimanded Three Arrows Capital (3AC). The troubled crypto fund manager is charged with providing inadequate information and surpassing the allowed threshold for assets under management (AUM) designed for fund managers. 

MAS Reprimands Three Arrows Capital (3AC)

According to the official report, MAS stated that the reprimand is related to several regulatory violations by the company over the past few years. 

The regulatory agency disclosed that 3AC has been probed since June 2021 for breaches of policies under the Securities and Futures Act 2001 (SFA) and the Securities and Futures (Licensing and Conduct of Business) Regulations (SFR). 

MAS explained that 3AC received authorization as a registered fund management company (RFMC) in August 2013, allowing the firm to operate as a regulated asset manager with fewer than 30 investors. 

Under the RFMC rule, the firm was obligated to manage a maximum of $250 million worth of assets with constant reports to the financial regulators, who highlighted that the firm had exceeded the limit twice, between July and September 2020 and from November 2020 to August 2021.

Failure to Report Appropriate Information

MAS also revealed that 3AC failed to notify the agency of changes in directorships and shareholdings of its directors, Mr. Su Zhu and Mr. Kyle Livingston Davies, within the appropriate timeline. 

The asset management company also diverted the management of its main assets to an offshore account in the British Virgin Islands (BVI) on September 1, 2021. It resumed nurturing a fragment of the fund’s holdings in February 2022. 

However, MAS stated that the representations were misleading as the firm failed to notify the regulators that Zhu was also a shareholder of the BVI entity. MAS 

3AC Planned to Exit Singapore Before Turmoil

Prior to the massive market turbulence that struck Three Arrows capital, the fund submitted a notice in April to the MAS revealing plans to discontinue offering its fund management services in Singapore starting May 6, 2022. 

However, the crypto market suffered a steep drop in the same month, leading to the crash of the Terra (LUNA) blockchain and causing a chain of adverse reactions in the industry. 3ACsuffered a severe liquidation crisis due to overleveraged positions and was issued a liquidation order from a BVI court on June 29.