The Founders of Three Arrows Capital Barred from Financial Activity in Singapore
The founders of Three Arrows Capital (3AC), a cryptocurrency hedge fund based in Singapore, have been banned from engaging in financial activities in the country for nine years, according to a press release by the Monetary Authority of Singapore (MAS). Former CEO Zhu Su and chair/director Kyle Davies are accused of violating the Securities and Futures Act 2001 (SFA) and Securities and Futures Regulations (SFR).
The prohibition order states that Su and Davies failed to inform the MAS within the required timeframe about the employment of Mr. Cheong Jun Yoong Arthur, who served as a hedge fund manager between August 2020 and September 2021. The founders also provided false information to the MAS, claiming that Arthur was not involved in any regulated activities with them.
Additionally, the prohibition order highlights that 3AC did not have an appropriate risk management framework for cryptocurrency trading. The firm was the first major cryptocurrency company to go bankrupt during the “crypto winter” of 2022.
MAS representative Loo Siew Lee expressed serious concern over Su and Davies’ disregard for regulatory requirements and their failure to fulfill their directors’ duties. MAS will take action against senior managers who engage in such misconduct.
Zhu and Davies’ Open Exchange in Dubai
Although prohibited from starting a financial business in Singapore, Su and Davies have launched a new venture called Open Exchange (OPNX) in Dubai. OPNX specializes in trading derivatives and claims against bankrupt cryptocurrency entities.
In May, both founders received written reprimands from Dubai’s Virtual Assets Regulatory Authority (VARA) regarding OPNX. The platform had been offering virtual asset exchange services without obtaining necessary regulatory licenses.
VARA stated that it will continue to monitor OPNX’s activities and investigate further corrective measures to protect the market.
Hot Take: Three Arrows Capital Founders Barred from Financial Activity in Singapore, Launch Open Exchange in Dubai
The founders of Three Arrows Capital, Zhu Su and Kyle Davies, have been banned from participating in financial activities in Singapore for nine years due to violations of regulatory requirements. This action was taken by the Monetary Authority of Singapore (MAS) after the founders failed to inform the MAS about the employment of a hedge fund manager and provided false information. Furthermore, 3AC lacked an appropriate risk management framework for cryptocurrency trading.
Despite their prohibition in Singapore, Su and Davies have launched Open Exchange (OPNX) in Dubai, which specializes in trading derivatives and claims against bankrupt crypto entities. However, they have faced regulatory scrutiny from Dubai’s Virtual Assets Regulatory Authority for operating without the necessary licenses.
This case highlights the importance of adhering to regulatory requirements in the cryptocurrency industry and serves as a warning to senior managers who fail to fulfill their duties. It also demonstrates the founders’ resilience as they continue their ventures outside of Singapore.
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