The collapse of the Terra ecosystem in May left the cryptocurrency industry in a horrible situation. People began to have second thoughts about buying cryptocurrencies after the crisis, which highlighted the need for more regulation and oversight. The SEC and the CFTC, two of the main American authorities, have now started looking into three arrows capital.
They want to determine whether there are any holes and whether the three arrows capital and manager broke any rules by not telling investors how strong the company’s financial sheet was since they hadn’t registered with the authorities. The firm and anybody connected to it may face additional punishment as a result of the probe.
Following the failure of the TerraUSD stablecoin, the fund has experienced significant losses. Inability to recover from the catastrophe left three arrows capital unable to meet its lenders’ demands for margin. As a result, the business filed for bankruptcy.
The bankrupt hedge fund was chastised by the Monetary Authority of Singapore and the U.S. regulators for providing fraudulent information and exceeding the AUM cap. A month ago, liquidators took custody of the three arrows capital funds, which are worth tens of millions of dollars, at the Singapore high court’s request.
Teneo, the court-appointed liquidator, claimed that the 3AC founders had disobeyed the unwinding procedure. According to the court petition from last week, the liquidator then requested that the three arrows capital founders be served with a subpoena.
The UST crash was investigated earlier in June 2022 by South Korean officials to determine whether foreign pricing manipulation and other factors played a role in it.