- The SEC and CFTC are investigating Three Arrows Capital.
- 3AC misled reportedly investors about its balance sheet and failed to register.
- The probe was not officially disclosed; Bloomberg cited an anonymous source.
The Commodity Futures Trading Commission and the Securities and Exchange Commission are investigating whether crypto hedge firm Three Arrows Capital (3AC), which declared bankruptcy in July, deceived investors, Bloomberg News reported on Monday.
The report states that the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) are looking into whether Three Arrows violated any regulations regarding investor conduct.
Specifically, it appears that the authorities are looking into whether the company failed to register with either of the agencies or deceived investors about its financial standing.
However, there has been no official word that either the SEC or the CFTC are conducting an inquiry. Bloomberg’s report is based on the information shared by an anonymous insider.
In related news, Three Arrows Capital is already being investigated by Singapore officials. The Monetary Authority of Singapore (MAS) asserts that the firm misled the authorities. Furthermore, the company cooperated with bankruptcy court requirements, so advisory firm Teneo was allowed to investigate the company with the approval of the Singapore High Court.
However, A court motion filed by Teneo on October 14 in the United States Bankruptcy Court Southern District of New York stated, “[The] Founders’ whereabouts remain unknown.”
It also stated that the “Singapore counsel purporting to represent the Founders,” Advocatus Law LLP, had refused to accept the subpoenas on their behalf and that the founders had “yet to offer any forthright cooperation,” having “only made themselves directly available for two brief discussions” since the proceedings began.
The liquidators had thus requested that the court utilize “alternative means” to serve subpoenas, with is thought to involve contacting the parties via their Twitter and email accounts.
Three Arrows, located in Singapore, declared bankruptcy in July, claiming that its firm had “collapsed in the aftermath of extreme fluctuations in cryptocurrency markets,” namely the collapse of the TerraUSD algorithmic stablecoin in May.
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