Fri. Sep 22nd, 2023

Regulation HK

Financial Regulator

MAS Imposes 9-Year Ban on Directors of Three Arrows Capital

2 min read

MAS reprimanded the bankrupt crypto hedge fund for regulatory violations last June. The regulator has since uncovered additional violations.

MAS (Monetary Authority of Singapore) has issued nine-year prohibition orders against two of the senior-most executives from defunct crypto hedge fund Three Arrows Capital.

Three Arrows Capital filed for bankruptcy in July 2022 after defaulting on a USD 667 million loan to Canada’s Voyager Digital amid last year’s crypto market crash. The company has been under investigation in multiple other jurisdictions including the US.

Last June, following investigations that began a year earlier, MAS reprimanded Three Arrows for

  • providing false information to MAS

  • failing to notify MAS about directorship and shareholding changes

  • exceeding the AUM threshold allowed for Singapore-authorised registered fund management companies

In a statement on Thursday (14 September), MAS said it uncovered additional contraventions committed by Three Arrows, between August 2020 and January 2022, as follows:

  • failure to notify MAS within the required timeframe of employment of a representative who served as a portfolio manager

  • provision of false information to MAS by representing that the representative was not conducting any regulated activity

  • failure to have in place appropriate risk management framework to identify, monitor, and address risks associated with the crypto and digital asset investments under management

Given the regulatory breaches, MAS has issued prohibition orders against Zhu Su, CEO of Three Arrows Capital, and Kyle Livingston Davies, the company’s chairman.

MAS said Zhu and Davies were primarily responsible for ensuring that Three Arrows complied with regulatory requirements but that they failed to discharge their duties and were responsible for the breaches.

“Senior management of fund managers are required to implement robust risk management measures to protect the interest of investors,” said Ms Loo Siew Yee, assistant managing director policy, payments and financial crime at MAS.

“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.”

Under the prohibition orders, both men are prohibited for nine years from performing any regulated activity and from taking part in the management of, acting as a director of or becoming a substantial shareholder, of any capital market services firm licensed in Singapore.

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