The founders of Three Arrows Capital, a crypto hedge fund that is no longer in operation, have been given a nine-year ban by the Monetary Authority of Singapore (MAS) for violating securities regulations. This means they are prohibited from participating in regulated financial activities and holding certain positions in capital market services companies in Singapore. The MAS accused them of providing false information and failing to comply with regulatory guidelines. The collapse of Three Arrows in 2022 due to risky leveraged crypto investments resulted in a $2 trillion drop in the digital asset market and subsequent bankruptcies. The MAS is attempting to recover $1.3 billion from the founders.
Zhu and Davies Are Banned for 9 Years, Possible Implications
According to a report by Bloomberg, the MAS strongly disapproved of Zhu and Davies’ disregard for regulatory requirements and neglect of their directorial duties. The founders allegedly did not fully cooperate with the liquidation process and are now facing attempts by the MAS to recover losses incurred before the fund’s collapse. In response, Zhu claimed that their attempts to cooperate were met with resistance.
In August, Zhu and Davies were involved in another business called OPNX, which was fined by Dubai’s regulatory authority for virtual assets. As of September 14, the fine has not been paid yet.
Hot Take: Consequences for Violating Securities Regulations
The ban imposed on the founders of Three Arrows Capital by the MAS serves as a severe consequence for their violation of securities regulations. It underscores the importance of adhering to regulatory guidelines when engaging in financial activities involving cryptocurrencies. The collapse of Three Arrows and its impact on the digital asset market demonstrates the potential risks associated with leveraged crypto investments. Moving forward, it is crucial for individuals and companies operating in the crypto space to prioritize compliance with securities laws to protect investors and maintain the integrity of the market.
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