Singapore’s central bank and regulator, the Monetary Authority of Singapore (MAS), has made a bombshell statement on the global financial situation.
Importantly, to Kyle Davis and Su Tzu, the duo behind Three Arrows Capital (3AC), 9 year ban on alcohol. The move was made in view of alleged violations related to the country’s securities laws.
MAS has banned Three Arrows Capital founders Su Zhu and Kyle Davies for nine years following regulatory violations.
🔹The couple’s most recent business, OPNX, was also fined $2.8 million in Dubai.
🔸Do you think this was justified or an overreaction by MAS?— House of Chimera (@HouseofChimera) September 15, 2023
Ripple effects of the ban
In addition to the nine-year restriction, Mr Davis and Mr Zhu are not allowed to operate or act as directors of, or hold any significant shares in, a capital markets service in the vibrant city-state of Singapore. do not have.
Additionally, you may not participate in any regulated activities during the ban period. The order, which took effect on September 13th, is therefore a major blow to their financial ambitions.
But this isn’t the first time 3AC’s co-founders have faced regulatory scrutiny. Last June, the day before it filed for bankruptcy, MAS reprimanded the hedge fund. The action was in response to allegations of providing false data to watchdogs, undisclosed changes to director roles, and breaches of legal caps on assets under management.
The bankruptcy filing itself was the result of a devastating collapse in the cryptocurrency market. This collapse was caused by the meltdown of the Terra ecosystem, leading to huge debt for 3AC.
As a result, the company’s leveraged crypto positions led to billions of dollars in loan defaults. Creditors are currently pursuing the founders, demanding up to $3.5 billion in debt.
NFT Holy Grail aiming at Sotheby’s, World Coin scanning millions of eyeballs, Aptos becoming the next Solana
3AC portfolio is now available🔥
— Kyle Davis 🐂 (@KyleLDavies) May 20, 2023
Further around the world, the Dubai Virtual Assets Regulatory Authority (VARA) has fined the founders of 3AC in connection with the OPNX exchange. While VARA imposed large fines on exchanges, it imposed smaller fines on executives, including Mr. Davis and Mr. Zhu, for violating the Emirati marketing regulations.
3AC Saga and Reckoning Blues
The drama unfolds one year after 3AC was ordered into liquidation in the British Virgin Islands. Liquidators are working hard to recover about $1.3 billion from Mr. Davis and Mr. Zhu. The report suggests that this large sum was incurred as debt at a time when 3AC was in dire financial condition, compounding the hardships of its creditors.
*THREE ARROWS liquidator seeks $1.3 billion from fund founder
— Zero Hedge (@zerohedge) June 27, 2023
In a twist of the story, despite their financial woes, Davis and Zhu did not disappear. They continue to operate on the virtual plane, launching platforms to trade claims against other bankrupt crypto entities.
However, only some of their ventures were successful. The new exchange platform they launched showed promising trading volumes and within a few months, trading volumes skyrocketed. However, their winning streak came to an end when regulators suspended the license of another crypto exchange for failing to comply with its stated obligations.
Moreover, given the elusive nature of founders, liquidators face a daunting task. The digital world may be buzzing with their activity, but their physical whereabouts remain a mystery. This action poses challenges for legal jurisdictions and impedes asset recovery efforts. Court hearings, digital subpoenas, and an ongoing cat-and-mouse game keep the legal and crypto communities on edge.
3AC’s trajectory from its heyday as a $10 billion hedge fund to its unfortunate downfall is a stark reminder of the volatile crypto market.
The story of a founder caught in a legal web that spans continents is an eye-opener for aspiring and experienced players in the crypto world. This proves that while the digital world may offer unimaginable prospects, it is essential to tread carefully and abide by local regulatory frameworks.
