The Monetary Authority of Singapore has taken decisive action by banning the founders of the crypto hedge fund Three Arrows Capital (3AC) from engaging in trading activities in the Singaporean market for a period of nine years. This action comes in response to the financial woes faced by 3AC, a Singapore-based hedge fund with a primary focus on cryptocurrency investments, which recently filed for bankruptcy.
The cryptocurrency company 3AC initiated bankruptcy proceedings in a British Virgin Islands court in late June, marking a significant setback for the once-prominent crypto hedge fund. The Monetary Authority of Singapore issued an order, effective as of Wednesday, September 13th, officially prohibiting 3AC founders Ju Su and Kyle Livingston Davies from conducting any transactions specified within the regulatory framework. Additionally, the founders are barred from participating in the management of capital market services companies operating in Singapore.
The Assistant Managing Director of the Monetary Authority of Singapore emphasized the importance of adhering to risk control measures, particularly among senior management at 3AC. This move is aimed at safeguarding the interests of investors and ensuring the integrity and stability of the financial sector.
As of now, the residence status of Mr. Ju and Mr. Davies remains undisclosed.
3AC’s financial woes have had significant repercussions within the cryptocurrency market. Notably, on July 6, 2022, Voyager Digital, a U.S.-based digital asset brokerage, filed for Chapter 11 protection in a U.S. court, attributing the move to substantial losses incurred due to 3AC’s default on loans totaling $670 million.
Further compounding 3AC’s difficulties, a New York state court has frozen the company’s assets and initiated the process of asset liquidation to settle court-ordered debts.
The cryptocurrency industry as a whole has experienced turbulence, with several companies being adversely affected by events such as the collapse of the stablecoin TerraUSD (UST) below its $1 peg to the U.S. dollar in May. Additionally, the Federal Reserve’s acceleration of interest rate hikes and concerns about an impending economic recession have created market volatility, impacting not only traditional stock markets but also exerting selling pressure on the cryptocurrency market.
The banning of 3AC’s founders from trading underscores the importance of regulatory oversight and risk management within the cryptocurrency sector, aiming to protect both investors and the broader financial ecosystem.