Singapore’s Central Bank Bans Crypto Founders from Financial Markets

Singapore’s Central Bank Bans Crypto Founders from Financial Markets

Singapore’s central bank, MAS, has banned Three Arrows Capital founders for nine years due to breaches including false information.

Key Points

  • Singapore’s central bank, MAS, bans Three Arrows Capital founders from participating in financial markets in the city-state for nine years.
  • Three Arrows Capital filed for bankruptcy following the May crash of Luna and TerraUSD cryptocurrencies.
  • MAS cites breaches including providing false information, failure to notify changes, and exceeding asset management limits.
  • Lack of transparency and risk management concerns are raised, emphasizing the importance of regulatory compliance in the cryptocurrency industry.

Singapore’s central bank, the Monetary Authority of Singapore (MAS), has taken action against Three Arrows Capital, one of the major cryptocurrency firms, by banning its founders from participating in financial markets within the city-state for a period of nine years. The founders, Zhu Su and Kyle Livingston Davies, were prohibited from engaging in any regulating activity or managing any capital market services forms in Singapore effective from September 13, 2023.

Three Arrows Capital Collapses

Three Arrows Capital became one of the first major cryptocurrency firms to succumb to insolvency following the dramatic crash of Luna and TerraUSD cryptocurrencies in May. As a result, the firm filed for bankruptcy in the British Virgin Islands in late June. These financial troubles have now led to further repercussions for the founders.

MAS has cited several breaches on the part of Zhu Su and Kyle Davies. These include providing false information to MAS, failing to notify the regulatory body about changes in directorship and shareholdings, and exceeding the allowable assets under management threshold for a registered fund management company. MAS also discovered that 3AC failed to inform the regulatory authority in a timely manner of the employment of Mr. Cheong Jun Yoong Arthur, a portfolio manager in the firm.

Concerns Over Transparency and Risk Management

One of the key concerns raised by MAS is the lack of transparency within 3AC. The firm’s failure to comply with regulatory requirements and its disregard for risk management measures have raised serious issues. Loo Siew Yee, MAS Assistant Managing Director, emphasized the importance of robust risk management measures implemented by senior management of fund managers. She stated that MAS takes a serious view of the founders’ flagrant disregard of regulatory requirements and their dereliction of their directors’ duties.

Founders’ Responsibilities

As directors of 3AC, Zhu Su and Kyle Livingston Davies were primarily responsible for ensuring the firm’s compliance with regulatory requirements under the Securities and Futures Act (SFA) and Securities and Futures Regulations (SFR). However, the MAS investigation found that they had failed in their duties and were directly responsible for the regulatory breaches committed by 3AC.

Continued Troubles for Founders

Earlier this year, Su Zhu and Kyle Davies completed a funding round for their new cryptocurrency exchange, OPNX. However, their troubles seem to continue as Dubai’s Virtual Assets Regulatory Authority recently imposed a massive $2.7 million fine against their new exchange, which the duo failed to pay.

This recent ban from participating in financial markets in Singapore further adds to the challenges faced by Three Arrows Capital and its founders. It serves as a reminder of the importance of complying with regulatory requirements and maintaining transparency within the cryptocurrency industry.