Three Arrows Capital Accused of Exceeding Assets Threshold, Providing False Information

Singapore’s financial regulator has accused embattled crypto hedge fund Three Arrows Capital of exceeding its assets threshold and providing false information.

Three Arrows Capital (3AC) is one of the highest profile investors hit by the sharp sell-off in crypto markets and is being liquidated, Reuters reported on Wednesday, citing a source familiar with the matter.

On Thursday, the Monetary Authority of Singapore (MAS) said it had “reprimanded” 3AC and accused it of providing misleading information concerning its relocation to the British Virgin Islands in 2021. It did not detail any penalties.

Three Arrows Capital did not immediately respond to enquiries sent outside business hours on Thursday.

MAS said 3AC failed to inform it quickly enough of changes to directors and their shareholdings.

It also said 3AC exceeded its $250 million ($179 million or nearly Rs. 1,400 crore)) assets-under-management cap during two periods in 2020 and 2021.

“In light of recent developments which call into question the solvency of the fund… MAS is assessing if there were further breaches,” the regulator said in a statement.

On June 15, 3AC’s co-founder sought to address rumours of distress in a tweet, saying the company was “fully committed to working this out”, without going into further detail.

Crypto broker Voyager Digital issued 3AC with a default notice on Monday after it failed to make payments on a loan of 15,250 bitcoin (about $290 million or nearly Rs. 2,500 crore) and $350 million (nearly Rs. 2,800 crore) worth of USDC, a stablecoin.

Bitcoin has halved in value against the dollar this quarter, which is set to be its worst on record.

It was last seen at $19,059 (nearly Rs. 15 lakh), a far cry from a peak of $69,000 (nearly Rs. 54 lakh) in November.

The turmoil in crypto markets has turned some so-called “stablecoins” volatile, prompted heavy stock falls and job cuts at crypto exchanges and seen some lenders including the high-profile Celsius platform freeze withdrawals.

© Thomson Reuters 2022