Singapore's central bank, the Monetary Authority of Singapore (MAS), has imposed a nine-year ban on Kyle Davies and Su Zhu, co-founders of Three Arrows Capital (3AC), a cryptocurrency hedge fund. The ban, effective from September 13 , stems from alleged violations of Singapore's securities laws.
During this ban period, Davies and Zhu are prohibited from participating in regulated activities. They are also barred from managing, holding director roles, or being substantial shareholders in any capital markets services business in Singapore.
The MAS's decision to ban both individuals came after further investigations into 3AC and its co-founders revealed additional breaches of securities laws. The MAS asserted that Su and Davies failed to notify the central bank when 3AC hired a new business representative, provided false information to regulators, and did not establish an appropriate risk management framework.
Loo Siew Yee, the MAS's Assistant Managing Director for Policy, Payments, and Financial Crime, emphasized the seriousness of these regulatory violations, stating that the MAS takes a dim view of such blatant disregard for regulatory requirements and duty.
This action by the MAS follows events from the previous year when 3AC faced insolvency issues. In June, just before filing for insolvency, the MAS accused the hedge fund of submitting false information, failing to report changes in its directorship, and exceeding asset management thresholds set by law.
The collapse of the Terra ecosystem in 2022 triggered a cryptocurrency market downturn, causing significant losses for 3AC. This left the fund's leveraged cryptocurrency positions exposed to billions of dollars in loan defaults. Creditors have claimed that 3AC owes them as much as $3.5 billion. Liquidators are now seeking to recover approximately $1.3 billion from Zhu and Davies, alleging that they assumed this debt when the company was already insolvent.
