Embattled Crypto Firm 3AC Faces US SEC, CFTC Probe: Report

The US regulators are going to investigate whether 3AC violated rules by misleading investors regarding the strength of the company’s balance sheet.

The US SEC will probe 3AC’s alleged rule violations.

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Failed crypto hedge fund firm Three Arrows Capital, also known as 3AC, is facing investigation by US regulators Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC), as per a report by Bloomberg. In July this year, 3AC filed for bankruptcy, saying its business had “collapsed in the wake of extreme fluctuations in cryptocurrency markets.” 

The US regulators are going to investigate whether 3AC violated rules by misleading investors regarding the strength of the company’s balance sheet without registering with the authorities. Bloomberg cited a source familiar with the matter that the scrutiny from the regulators can lead to additional penalties for the firms and the individuals.

In June this year, 3AC was also responsible for the collapse of Voyager Digital, the US-headquartered crypto lending platform. Voyager filed for bankruptcy in the wake of failed payments by 3AC on a loan of 15,250 Bitcoins. This roughly amounts to $324 million, as well as USDC stablecoins worth nearly $350 million.

Currently, the whereabouts of Three Arrows founders Su Zhu and Kyle Davies remains unknown. A month ago Court-appointed liquidator Teneo seized control of the funds at 3AC worth millions of dollars at the request of the Singapore high court. Teneo stated that 3AC founders didn’t comply with the unwinding process. 

Founded in Singapore in 2012, 3AC had a few billion dollars of assets under management. However, it was reported that 3AC exceeded its allowed assets under management for a prolonged period. Previously, the Monetary Authority of Singapore also reprimanded 3AC  for misleading the authority with allegedly false information.

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