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MAS reprimands Three Arrows Capital for providing false information

Photo of the MAS sign outside its building, illustrating a story on MAS reprimanding Three Arrows Capital for providing false information. (PHOTO: REUTERS/Edgar Su)
MAS reprimands Three Arrows Capital for providing false information. (PHOTO: REUTERS/Edgar Su) (Edgar Su / Reuters)

SINGAPORE — Crypto hedge fund Three Arrows Capital Pte Ltd was reprimanded by Singapore's central bank for providing false information and exceeding the allowed assets under management threshold.

Singapore-based Three Arrows obtained its registered fund management company (RFMC) status in August 2013 which allowed it to conduct fund management business with no more than 30 qualified investors and manage assets of no more than S$250 million, the Monetary Authority of Singapore (MAS) said in a statement on Thursday (30 June).

Three Arrows novated the management of the only fund it managed to an offshore entity in the British Virgin Islands on 1 September 2021, the regulator said.

While it resumed management of a portion of the fund's assets in February 2022, the company notified MAS on 29 April 2022 of its plans to cease fund management activity in Singapore with effect from 6 May.

The reprimand relates to contraventions by Three Arrows which occurred prior to its notification to MAS in April 2022. MAS has been investigating these breaches since June 2021.

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The breaches include failing to ensure information provided to MAS is not false or misleading. Three Arrows had represented to MAS that it had novated the management of its fund to an unrelated offshore entity with effect from 1 September 2021. However, this representation was misleading as Three Arrows and the offshore entity shared a common shareholder, Su Zhu, who is also a director of the hedge fund.

The company failed to inform MAS within the required timeline of changes in the directorships and shareholdings of its directors, Su Zhu and Kyle Livingston Davies.

Three Arrows had also exceeded its allowable assets under management limit of S$250 million between July 2020 and September 2020, and between November 2020 and August 2021, the regulator said.

MAS assessing for possible further breaches

In light of recent developments which call into question the solvency of the fund managed by Three Arrows, MAS is assessing if there were further breaches of its regulations.

A British Virgin Islands court ordered the liquidation of Three Arrows Capital after it failed to repay creditors, according to a Reuters report on Wednesday. Consultancy firm Teneo have been appointed as liquidators.

The company was established in 2012 by Su Zhu and Kyle Davies. In April, Zhu said the fund is planning to move its headquarters to Dubai from Singapore, a Coindesk report said.

Three Arrows’ assets under management were estimated to be about US$10 billion in March, according to blockchain analytics firm Nansen.

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