The implosion of Three Arrows Capital (3AC), one of the pioneering cryptocurrency firms, in the aftermath of Luna and TerraUSD’s dramatic slump has created tremors in the teeming city-state’s financial markets. The founders, Zhu Su and Kyle Davies, who experienced insolvency with the British Virgin Islands’ declaration of 3AC’s bankruptcy, have had another blow dealt. Monetary Authority of Singapore (MAS), the vigilant watchdog of Singapore’s financial milieu, passed an iron verdict barring the financial market duo for an extended span of nine years.
The broad-daylight debasement of 3AC was prominently due to the blatant disregard of financial directives. MAS, which unequivocally asserts on robust risk management by all fund managers, held Zhu and Davies accountable for multiple regulatory infringements. Both guilelessly provided false information to MAS, notably overlooking to notify changes in directorship or shareholdings. Well, it doesn’t end there; the duo also allegedly overshot the permissible assets-under-management threshold assigned to a registered fund management company.
Adding to the list of indiscretions, the founders hired a portfolio manager, Mr. Cheong Jun Yoong Arthur, in flagrant violation of SFR rules. The significant oversight of not reporting the hiring to the regulatory authority punctuated the palpable lack of transparency within the organization. In the absence of compliance with stringent MAS policies, the founders left investors in a quagmire of questions about the organization’s credibility and their own professional ethics.
Not to forget Zhu Su and Kyle Davies’ new brainchild, OPNX exchange, which recently completed a successful funding round. In an ironical turn of events, the new exchange stumbled upon a hefty fine of $2.7 million ordained by Dubai’s Virtual Assets Regulatory Authority. Unfortunately, the duo failed to clear this financial hurdle.
It seems the stage is set for a harsh future for the founders, who were once the flagbearers of the industry. Their flagrant disregard for financial norms along with their inability and disinterestedness in safeguarding the interest of investors led to their downfall. The ripple of 3AC’s bankruptcy and the founders’ subsequent punishment by MAS is echoing myriad questions about the sustainability and governance of capital market services in the ever-fluctuating world of cryptocurrencies. This turn of events subtly emphasizes the need for regulations fitting the unique dynamic and volatile character of cryptocurrencies.
Source: Cryptonews
