Infringements Lead to Nine-Year Ban for Three Arrows Capital Founders in Singapore
In the ever-changing world of cryptocurrency regulation, governments are striving to establish order and oversight. Unfortunately, the founders of Three Arrows Capital, who famously fled Europe following the hedge fund’s collapse during the 2022 FTX crisis, are once again making headlines for the wrong reasons. This time, they have drawn the ire of Singapore.
The Monetary Authority of Singapore (MAS) has issued a lengthy nine-year ban to co-founders Zhu Su and Kyle Davies. This punishment comes as a result of multiple infractions and breaches of regulatory laws within the country. The accusations include providing false information to regulators, failing to notify MAS about key personnel appointments, and lacking a proper risk management framework for digital assets under their management. These infractions violate the ‘Securities and Futures Act 2001’ and the ‘Securities and Futures (Licensing and Conduct of Business) Regulations (SFR).’
Consequences Beyond Legal Implications
As of September 13, 2023, Su and Davies are prohibited from engaging in regulated business activities in Singapore. They are not allowed to hold managerial or directorial positions or participate as major shareholders in capital markets.
Moreover, this ban highlights the repercussions of Su and Kyle’s involvement in the downfall of Three Arrows Capital. Once a major player in the crypto market, the hedge fund crumbled after the Terra Luna collapse in 2022. It ultimately filed for bankruptcy in July of that year with a long list of creditors.
Singapore’s Commitment to Regulatory Standards
The actions taken by MAS reflect its commitment to upholding regulatory standards in the digital landscape. This is especially significant considering Singapore’s favorable stance towards cryptocurrencies. In August, MAS introduced new regulations to protect legitimate businesses and local investors. These regulations specifically target stablecoins in active circulation with the aim of ensuring and maintaining stability.
Assistant managing director Ms. Loo Siew Yee stated, “MAS takes a serious view of Mr. Zhu’s and Mr. Davies’ flagrant disregard of MAS’ regulatory requirements and dereliction of their directors’ duties. MAS will take action to weed out senior managers who commit such misconduct.”
Implications for the Crypto Industry
The nine-year ban imposed on Zhu Su and Kyle Davies goes beyond the realm of regulatory action. It has the potential to impact the wider crypto industry, as Singapore’s approach to cryptocurrency and digital asset regulation may influence other regions.
Hot Take: Ban on Three Arrows Capital Founders in Singapore Raises Concerns for Crypto Industry
The recent nine-year ban issued to Zhu Su and Kyle Davies, co-founders of Three Arrows Capital, by the Monetary Authority of Singapore (MAS) has significant implications for the crypto industry. Not only does it highlight the consequences faced by individuals involved in fraudulent activities within the sector, but it also emphasizes Singapore’s commitment to maintaining regulatory standards in the digital landscape. As a region known for its favorable stance toward cryptocurrencies, Singapore’s actions may influence other jurisdictions’ approaches to crypto regulation. This case serves as a reminder that senior managers who engage in misconduct will face severe penalties, potentially impacting the broader industry.
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