Three Arrows Capital is a crypto hedge fund officially based in Singapore. It was established by Su Zhu and Kyle Davies in 2012. Basically, they operated as any hedge fund – collecting funds from investors and investing them in different assets.
In this case, it was a crypto fund, and the money was invested in other crypto exchanges, including Binance, Synapse, ThetaNuts Finance, Blockchain.com, and more. The hedge fund is undergoing liquidation and the owners are missing. So, the logical question here is what should investors do?
The answer to this question mainly depends on the country. For instance, crypto exchanges are legalized through the Bank Secrecy Act in the US. In practice, any crypto exchange must register with FinCEN, implement the AML/CFT program, and keep records submitted to the relevant authority bodies.
In the EU, this question is still different from country to country, and there’s no uniform rule. For instance, the Binance exchange recently obtained French regulation, indicating that AMF considers itself a regulator of this asset.
There’s a landmark crypto regulation that should serve as a rule for all countries, but it’s yet to be seen how this area will implement everything they have agreed on.
Since Three Arrows Capital, a.k.a., 3AC, was legally registered in Singapore, it belonged to MAS or Monetary Authority of Singapore regulation. At this very moment, MAS is pressuring the liquidation to end so that they can find a solution for investors. Simultaneously, there is a lawsuit against the firm in the US.
First and foremost, this firm operated through a partner company based in the British Virgin Islands. Anyone who has ever invested with any brokerage knows that offshore firms are unreliable and often unregulated.
Since the majority of the funds’ assets are at the BVI, all the court processes should be held in this country.
Just as an example of the BVI scam, we will list a couple of other brokers operating from the same country – MultiBank Group, FiboGroup, and Capital.com. While some have legitimate entities in the Tier1 zone, they are all based in the British Virgin Islands and under loose BVI regulation.
The firm holds $10 billion of investors’ funds. The main issue is the legal jurisdiction and the fact that the fund owners refuse to provide the necessary information and cooperate in the liquidation process. According to the news, they’re making their defense on Twitter, but none of the two is willing to participate in the process and reimburse the victims.
Three courts have started the liquidation process – in Singapore, the US, and the BVI. According to their statements, the firm defaulted on a $670 million loan by crypto broker Voyager Digital, which went bankrupt as well.
The company also failed to repay $270 million to the Blockchain.com exchange. Since owners are clearly unwilling to participate and are trying to escape justice and save their own assets, it’s unclear whether and how investors will be able to get their funds back.
With the ongoing events, the crypto market looks less stable than ever. Even though it was an unregulated market, investors knew they could recover their funds.
With major brokers and hedge funds failing, there are a lot of concerns regarding further crypto regulations and the use of the asset.
Other large crypto lending firms, such as Babel Finance and Celcius, froze all the transactions, preparing for the so-called crypto winter.
Are we witnessing the failure of the bubble, or is this just an inevitable consequence of the global crisis? It’s left to be seen. But the big question here is what can 3AC victims do and how can they recover the funds?
As mentioned, there are quite a lot of court cases against 3AC, and it’s expected for the number to rise. With owners going AWOL and attorneys trying hard to save what’s left of the funds’ assets, the only real victims are 3AC investors.
Global Fraud Protection has experience dealing with scam brokers and crypto exchanges. There are several ways to try and recover stolen funds.
If you present your case in front of the relevant authorities, including banks and regulators, you may have a chance to recover a part of the stolen money.
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