US regulators are prying deep into the remnants of failed hedge fund Three Arrows Capital Pte Ltd (3AC, 三箭資本) as they try to untangle the fallout of this year’s crypto crash.
Three Arrows, which until recently was one of the industry’s most prominent firms, filed for bankruptcy in July after the broad sell-off in digital assets spurred in part by the collapse of the terra blockchain.
The US Commodity Futures Trading Commission (CFTC) and the US Securities and Exchange Commission (SEC) are looking into whether the money manager breached rules by misleading investors about the strength of its balance sheet and not registering with the agencies, two people familiar with the matter said.
Photo: Reuters
Scrutiny from the agencies, both of which declined to comment, can lead to monetary fines and other penalties for firms and individuals.
At its zenith, Three Arrows counted a few billion dollars under management, making it a major player in the crypto world. Known for its bullish stance, it was also a recipient of loans from firms across the industry, and was a venture investor in some of the industry’s best-known start-ups.
However, the firm sustained losses on its position in the terra blockchain project, which came crashing down as the so-called algorithmic stablecoin terraUSD crumbled in May.
As the token’s collapse spread across the broader crypto market over the following weeks, Three Arrows was unable to meet margin calls from its lenders and eventually declared insolvency.
Liquidators overseeing the wind-down of the firm, which operated from Singapore until at least early May, have seized control of tens of millions of dollars of the fund’s assets.
However, that is a fraction of the billions of dollars that creditors, including bankrupt crypto lenders Voyager Digital and Celsius Network, said they were owed.
Teneo, the court appointed liquidator, has claimed that Three Arrows’ founders have not fully cooperated with the unwinding.
They took the unusual step of asking a US judge for permission to serve founders Zhu Su (蘇朱) and Kyle Davies with subpoenas through their Twitter accounts and e-mail addresses, because normal methods have failed, court documents filed last week showed.
Celsius Network LLC is also facing scrutiny from US regulators. Lawyers for the firm this month disclosed that it had received a federal grand jury subpoena from the US District Court for the Southern District of New York, as well as inquiries from the CFTC, the SEC and the US Federal Trade Commission.
The CFTC is investigating if Celsius failed to disclose how customers’ funds were used and if some of its conduct amounted to market manipulation, a person familiar with the matter said.
Although the CFTC’s jurisdiction over crypto is generally limited to derivatives, the agency can take enforcement action if it believes there is fraud or manipulation in the underlying market. The SEC claims oversight over digital coins that qualify as securities under its rules. Both regulators also oversee investment firms.
CHIP WAR: Tariffs on Taiwanese chips would prompt companies to move their factories, but not necessarily to the US, unleashing a ‘global cross-sector tariff war’ US President Donald Trump would “shoot himself in the foot” if he follows through on his recent pledge to impose higher tariffs on Taiwanese and other foreign semiconductors entering the US, analysts said. Trump’s plans to raise tariffs on chips manufactured in Taiwan to as high as 100 percent would backfire, macroeconomist Henry Wu (吳嘉隆) said. He would “shoot himself in the foot,” Wu said on Saturday, as such economic measures would lead Taiwanese chip suppliers to pass on additional costs to their US clients and consumers, and ultimately cause another wave of inflation. Trump has claimed that Taiwan took up to
A start-up in Mexico is trying to help get a handle on one coastal city’s plastic waste problem by converting it into gasoline, diesel and other fuels. With less than 10 percent of the world’s plastics being recycled, Petgas’ idea is that rather than letting discarded plastic become waste, it can become productive again as fuel. Petgas developed a machine in the port city of Boca del Rio that uses pyrolysis, a thermodynamic process that heats plastics in the absence of oxygen, breaking it down to produce gasoline, diesel, kerosene, paraffin and coke. Petgas chief technology officer Carlos Parraguirre Diaz said that in
SUPPORT: The government said it would help firms deal with supply disruptions, after Trump signed orders imposing tariffs of 25 percent on imports from Canada and Mexico The government pledged to help companies with operations in Mexico, such as iPhone assembler Hon Hai Precision Industry Co (鴻海精密), also known as Foxconn Technology Group (富士康科技集團), shift production lines and investment if needed to deal with higher US tariffs. The Ministry of Economic Affairs yesterday announced measures to help local firms cope with the US tariff increases on Canada, Mexico, China and other potential areas. The ministry said that it would establish an investment and trade service center in the US to help Taiwanese firms assess the investment environment in different US states, plan supply chain relocation strategies and
Japan intends to closely monitor the impact on its currency of US President Donald Trump’s new tariffs and is worried about the international fallout from the trade imposts, Japanese Minister of Finance Katsunobu Kato said. “We need to carefully see how the exchange rate and other factors will be affected and what form US monetary policy will take in the future,” Kato said yesterday in an interview with Fuji Television. Japan is very concerned about how the tariffs might impact the global economy, he added. Kato spoke as nations and firms brace for potential repercussions after Trump unleashed the first salvo of
RSS