Singapore’s central bank has issued nine-year prohibition orders to Kyle Davies and Su Zhu over alleged violations of the country’s securities laws at their co-founded crypto hedge fund Three Arrows Capital (3AC).
In a Sept. 14 statement, the Monetary Authority of Singapore (MAS) said Zhu and Davies are banned from regulated activities during the prohibition period that started Sept. 13.
They also won’t be permitted to manage, act as a director, or be a substantial shareholder of any capital market services business in Singapore.
In its decision to bar the pair, MAS said it found further securities law violations when it undertook further investigations into the bankrupt 3AC and its co-founders.
MAS claimed Su and Davies failed to notify the central bank that 3AC employed a new business representative, gave false information to the regulator, and failed to have an appropriate risk management framework in place.
Loo Siew Yee, MAS’ assistant managing director of policy, payments and financial crime, said, “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,” she added.
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Last June — amid widely reported insolvency and a day before 3AC filed for bankruptcy — MAS reprimanded the hedge fund over providing it with false information, not telling the watchdog about Zhu’s and Davies directorship changes and exceeding the legal assets under management threshold.
3AC was wiped out in last year’s crypto market crash triggered by the Terra ecosystem collapse which saw its leveraged crypto positions expose it to billions in loan defaults.
Creditors claim 3AC owes up to $3.5 billion and liquidators are seeking to recover around $1.3 billion from Zhu and Davies who allegedly incurred the debt when the firm was already insolvent.
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