Friday, June 21, 2024

Singapore’s Monetary Authority (MAS) has enforced a nine-year prohibition against the founders of Three Arrows Capital (3AC), Zhu Su and Kyle Davies, effectively barring them from participating in regulated financial operations within the nation. This action follows an intensive investigation by MAS that reportedly discovered numerous infractions of securities regulations committed by the defunct cryptocurrency hedge fund and its executive team.

Nine-Year Prohibition Enacted Against Three Arrows Capital Founders for Regulatory Breaches

The imposed prohibitions preclude Su and Davies from partaking in any regulated financial activities, as well as from assuming management roles or attaining significant shareholding positions in any firm offering capital market services in Singapore. The formal announcement clarified that these prohibitions became operative on September 13.

Initial warnings against 3AC were issued by MAS in June, citing the provision of misleading information and transgressions related to assets under management limitations. Subsequent scrutiny revealed that 3AC neglected to inform authorities regarding the recruitment of a portfolio manager, misrepresented facts concerning the manager’s responsibilities, and lacked a sufficient risk management structure for their cryptocurrency investment activities.

According to MAS, as directors of 3AC, Su and Davies were chiefly accountable for maintaining compliance with pertinent regulations. The regulatory body elaborated in a press statement, “Investigations conducted by MAS confirmed their failure to fulfill their obligations and established their culpability for the breaches committed by TACPL.”

Loo Siew Yee, the Assistant Managing Director of MAS, commented: “Executives of asset management firms are mandated to institute rigorous risk management protocols to safeguard the financial interests of their investors. MAS holds a stringent stance against the blatant non-compliance with regulatory norms and dereliction of fiduciary responsibilities exhibited by Mr. Zhu and Mr. Davies.”

The newly-imposed prohibitions are a continuation of the adverse repercussions following the collapse of 3AC last year. The once-prominent cryptocurrency hedge fund declared bankruptcy in July 2022 after accumulating liabilities exceeding $3 billion and experiencing near-total asset depletion. Regulatory agencies in various jurisdictions have undertaken legal actions against 3AC and its founding members for their purported misconduct.

We invite your scholarly analysis and viewpoints on the prohibition of 3AC founders from regulated financial activities in Singapore in the comments section below.

Frequently Asked Questions (FAQs) about Three Arrows Capital ban

What regulatory body issued the nine-year ban on Three Arrows Capital founders?

The Monetary Authority of Singapore (MAS) issued a nine-year prohibition against Zhu Su and Kyle Davies, the founders of Three Arrows Capital.

What are the specific charges against Three Arrows Capital and its founders?

The charges stem from multiple violations of securities laws. These include providing false information, exceeding assets under management limits, failing to notify regulators about hiring a portfolio manager, and lacking an adequate risk management framework for cryptocurrency investments.

When did the prohibition orders take effect?

The prohibition orders against Zhu Su and Kyle Davies took effect on September 13.

What activities are the founders restricted from participating in?

Zhu Su and Kyle Davies are prohibited from engaging in any regulated financial activities in Singapore. Additionally, they cannot take part in managing or becoming a major shareholder of any firm offering capital market services in the country.

What preceded the ban by MAS?

MAS had initially issued warnings to Three Arrows Capital in June for providing false information and for exceeding assets under management limitations. Further investigation led to the discovery of additional violations.

Who is responsible for the regulatory oversight?

The Assistant Managing Director of MAS, Loo Siew Yee, stated that senior management of asset management firms are required to implement robust risk management measures. Zhu and Davies were primarily responsible for ensuring compliance with these regulatory requirements.

What happened to Three Arrows Capital?

The cryptocurrency hedge fund filed for bankruptcy in July 2022, after amassing over $3 billion in liabilities and losing nearly all of its assets.

Are there repercussions for Three Arrows Capital outside of Singapore?

Yes, regulatory agencies in multiple jurisdictions have initiated legal actions against Three Arrows Capital and its founders for alleged misconduct.

What does this ban signify for the broader financial and cryptocurrency sector in Singapore?

While the text does not elaborate on broader implications, the strict actions taken by MAS indicate a stringent regulatory environment for financial and cryptocurrency entities operating in Singapore.

More about Three Arrows Capital ban

  • Monetary Authority of Singapore Official Statement
  • Three Arrows Capital: Company Profile
  • Singapore Securities Laws Overview
  • MAS Regulatory Guidelines for Asset Management Firms
  • Cryptocurrency Regulations in Singapore
  • Overview of Three Arrows Capital Bankruptcy
  • International Regulatory Actions Against Three Arrows Capital


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