The now-defunct crypto hedge fund Three Arrows Capital (3AC) is reportedly continuing to face legal scrutiny from US regulators months after it filed for bankruptcy in July.
Citing people familiar with the matter, Bloomberg reports that the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) are looking into the possibility that 3AC committed violations for failing to register with the agencies and misleading investors about the state of its finances.
The report says that the investigation may lead to monetary fines and other penalties for the firm and specific individuals. The probe comes as the whereabouts of 3AC’s founders Su Zhu and Kyle Davies remain unknown.
3AC filed for bankruptcy after being hammered by a downturn in crypto markets which was exacerbated by the collapse of Terra (LUNA). Crypto lenders like Voyager Digital also went under after the Singapore-based firm defaulted on its loans.
As the troubled firm undergoes bankruptcy proceedings, court-appointed liquidators moved over 300 Starry Night Capital non-fungible tokens (NFTs) from 3AC’s wallets earlier this month.
Prior to the transfer, Teneo, the liquidation company, alleged that Zhu and Davies did not give an accurate picture of the company’s assets. At the same time, Zhu said that liquidators gave a misleading representation of 3AC’s operations, timelines and relationships to Singapore’s court.
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