SEC and CFTC Investigate Three Arrows Capital for Misleading Investors

SEC and CFTC Launch Investigation into 3AC

The Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) are reportedly investigating Three Arrows Capital (3AC), a crypto hedge fund that filed for bankruptcy in July. The probe focuses on whether 3AC misled investors about its financial condition and failed to register with regulatory agencies.

Regulatory Scrutiny Intensifies

Authorities are examining whether 3AC violated investor protection laws or registration requirements. While neither the SEC nor the CFTC has officially confirmed the investigation, Bloomberg cited an anonymous source familiar with the matter. This adds to the growing regulatory scrutiny surrounding the collapsed hedge fund.

Cooperation Issues with Founders

In a related development, the founders of 3AC have reportedly been uncooperative with liquidators. A court filing revealed that their whereabouts remain unknown, and they have only engaged in limited discussions since bankruptcy proceedings began. Liquidators are now seeking alternative methods, such as serving subpoenas via email or Twitter, to compel their cooperation.

Singaporean Authorities Also Investigating

The Monetary Authority of Singapore (MAS) is separately investigating 3AC for allegedly misleading authorities. A Singaporean court has approved an investigation by advisory firm Teneo, which is working to uncover the firm's financial dealings.

Background on 3AC's Collapse

3AC filed for bankruptcy in July, citing the collapse of the TerraUSD stablecoin and extreme crypto market volatility. The firm's downfall has raised concerns about transparency and regulatory compliance in the crypto investment space.

The ongoing investigations highlight the regulatory challenges facing crypto firms and the need for greater oversight in the industry.