Now, the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) are investigating the hedge fund to determine whether or not it broke any rules by deceiving investors about the strength of its balance sheet and by failing to register with the appropriate regulators.
However, it is quite possible that the investigation will end with the company and its officials being subject to monetary fines as well as other consequences. Both Su Zhu and Kyle Davies, who were the original founders of 3AC, have not been seen or heard from in some time.
A Regression From Grace
Before it started having problems with its liquidity, 3AC was one of the most successful hedge funds in the entire globe. The company managed a few billion dollars' worth of assets before it ran into problems. In addition to this, 3AC was a venture capitalist in some of the most well-known startups in the sector and obtained loans from multinational companies.
However, the company's finances took a significant hit as a result of the massive losses that were incurred as a result of the crash of the Terra stablecoin (TerraUSD). The ramifications of the Terra crisis rippled throughout the greater crypto market, which ultimately led to 3AC's decision to declare bankruptcy after the company was unable to meet margin calls from its lenders.
Teneo, a liquidator appointed by the Singapore high court to supervise the seizure of 3AC assets, has taken possession of assets belonging to the fund that are worth tens of millions of dollars. 3AC maintained a presence in Singapore with an office there until at least the beginning of May. Due to the fact that its investments in the TerraUSD were unsuccessful, 3AC is now in debt to the cryptocurrency lending companies Voyager Digital and Celsius Network.
Teneo, on the other hand, maintains that the founders of 3AC have not participated sufficiently with the breakup of the group. An unprecedented development occurred when Teneo made a request to a judge in the United States for permission to serve subpoenas on Zhu and Davies through their email and Twitter accounts. Teneo believed that this strategy would be more successful given the failure of more traditional approaches.
There are more regulatory agencies looking into 3AC than just the SEC and CFTC combined. On June 30th, the company was fined by the Monetary Authority of Singapore (MAS) for allegedly giving misleading information and exceeding the limit of assets under its administration.
According to court documents that were revealed earlier this month, the fund's liquidators were given permission to repatriate part of the company's assets from Singapore to the British Virgin Islands. This authority was purportedly granted by the court.
Bankrupt Celsius Network Under Scrutiny
The cryptocurrency lender Celsius is also receiving a lot of attention from the government regulators in the United States. This month, attorneys for the company stated that it had also been contacted by the Commodity Futures Trading Commission (CFTC), the Securities and Exchange Commission (SEC), and the Federal Trade Commission (FTC), along with a court subpoena from the United States District Court for the Southern District of New York.
The Commodity Futures Trading Commission (CFTC) is investigating whether Celsius failed to disclose how the cash from its customers were spent, as well as whether some of the company's acts constituted market manipulation. It has been reported that the company is participating with the inquiries; nevertheless, the specifics of the probe have not been made public by either the company or the regulators.