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Disgraced 3AC Founders Barred From Regulated Financial Activity

Published September 14, 2023 9:57 AM
James Morales
Published September 14, 2023 9:57 AM
Key Takeaways
  • Zhu Su and Kyle Livingston Davies have been reprimanded for their mismanagement of bankrupt Three Arrows Capital.
  • Both men have received prohibition orders from the Monetary Authority of Singapore.
  • They are banned from taking on an executive or shareholder role at any capital market services firm for the next nine years.

After the crypto hedge fund Three Arrows Capital (3AC) crashed and burned in July 2022, its founders—Zhu Su and Kyle Livingston Davies—fled Singapore in a hurry. In the 14 months since, both men have been notoriously elusive, often stonewalling 3AC liquidators and refusing to engage in bankruptcy proceedings.

Angry creditors aside, in recent times, Zhu and Davies have returned from the wilderness and even founded a new business venture in Dubai. But the disgraced tycoons won’t be returning to set up shop in Singapore, where the central bank has barred them from taking on a leadership role at any capital markets services firm for the next nine years.

Monetary Authority of Singapore Issues Prohibition Ordeer to 3AC Founders

On Wednesday, September 13, the Monetary Authority of Singapore (MAS) issued 9-year prohibition orders  against Zhu and Davies for securities and futures regulations breaches.

Specifically, the two men are charged with failing to notify the regulator when 3AC employed fund managers, submitting false information to the MAS, and not having an appropriate risk management framework in place.

Under the prohibition orders, Zhu and Davies are barred from performing any regulated activity and from “taking part in the management of, acting as a director of or becoming a substantial shareholder, of any capital market services firm,” as defined by the Securities and Futures Act.

Commenting on the bans, Ms. Loo Siew Yee of the MAS said the authority “ takes a serious view of Mr. Zhu’s and Mr. Davies’ flagrant disregard of MAS’ regulatory requirements and dereliction of

their directors’ duties.”

“MAS will take action to weed out senior managers who commit such misconduct,” she added.

Zhu and Davies Unfazed 

Considering the significant losses incurred by 3AC creditors and the allegations of mismanagement and reckless investment at the highest level, some observers have argued that the fund’s founder got off lightly. 

By comparison, the FTX founder Sam Bankman-Fried is looking at 30 years to life as he heads into his trial on multiple fraud charges next month.

What’s more, Zhu and Davies appear to have moved on. In March, the two men formed a new crypto venture in Dubai—OPNX.

Ironically, considering its founders’ past, OPNX allows investors to trade bankruptcy claims against insolvent crypto companies. 

Currently, only FTX and Celsius claims are listed on the platform. But OPNX intends to add Genesis, BlockFi, Voyager, and, yes, 3AC claims too in the coming months. 

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