Bankrupt Three Arrows Capital is now under investigation by SEC and CFTC as its co-founders disappear

  • The firm is being investigated for potentially misleading investors and failure to register with the authorities.
  • Bankrupt firms' liquidator Teneo is looking to issue subpoenas following the sudden disappearance of its co-founders.
  • Teneo already has the Singapore high court's permission to probe the firm to carry out the liquidations.

The multiple crashes this year, which were responsible for the market value of all cryptocurrencies falling below the one trillion mark, also marked the end of many crypto-related companies. Two major industry players were affected to the point where they ended up going bankrupt, but their problems do not seem to be coming to an end soon.

3AC takes another hit

According to a report from Bloomberg, Three Arrows Capital (3AC) is under investigation by the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC). The regulatory bodies are apparently looking into whether 3AC was violating investor conduct rules.

The investigation would help SEC and CFTC determine if investors were misled about information about the company's balance and registration with authorities. However, it is important to note that neither SEC nor CFTC has confirmed or announced the investigation. 

The collapse of the Terra ecosystem was the trigger for 3AC's losses, which resulted in the failure of payment of its loans from Voyager Digital. This led to the liquidation of its assets, and days later, Three Arrows Capital declared bankruptcy. Not too long after this, Voyager also filed for bankruptcy, citing terrible market conditions.

3AC is already being investigated by regulatory bodies in Singapore and is now being joined by the United States.

Liquidation troubles

Following the bankruptcy, Teneo was appointed as the company responsible for liquidating 3AC's assets. However, Teneo has been unsuccessful in reaching the co-founders of Three Arrows Capital, as they have seemingly disappeared. 

The liquidator is now looking for permission to issue subpoenas to these co-founders as a last resort. Commenting on the same in an interview with Bloomberg, the liquidator said, 

"The founders, through counsel, have maintained that the limited information provided to us to date, which amounts to an incomplete list of assets and selective disclosures regarding the means to access digital assets electronically, represents all of the documents in their possession relating to Three Arrows."

This could lead to further troubles for Three Arrows Capital.

About the Author

You may also like these