Did Insolvent 3AC Failed To Register As A Company Or Deceived Investors? The CFTC and SEC Are Looking Into It

As a result of the multiple crashes this year, the market value of cryptocurrencies has fallen to well below $1 trillion. Consequently, many cryptocurrency-related businesses were wiped out. Two major companies in the sector took such a hit that they had to declare bankruptcy, and their difficulties don’t appear to be resolved anytime soon.

3AC Sustains yet Another Blow

Bloomberg says that the Securities and Exchange Commission and the Commodity Futures Trading Commission (CFTC) are investigating Three Arrows Capital (3AC). 

It would appear that the authorities are attempting to determine whether or not 3AC violated any regulations governing how it interacts with investors.

The probe would assist the SEC and CFTC in determining whether or not investors were deceived about information regarding the company’s financial standing and regulatory compliance. On the other hand, it is essential to highlight that neither the SEC nor the CFTC has acknowledged or announced the investigation.

3AC’s losses were precipitated by the demise of the Terra environment, which led to the company’s inability to make payments on the loans it had taken from Voyager Digital. 

Because of this, the company’s assets were eventually sold off, and a few days later, Three Arrows Capital filed for bankruptcy. Soon after, Voyager also declared bankruptcy, claiming the dismal conditions in the market as their justification.

Regulatory organizations in Singapore are already conducting investigations into 3AC, and the United States is also joining in on the action.

Troubles with Liquidation

After 3AC filed for bankruptcy, the court named Teneo as the business that would be responsible for selling off its assets. However, Teneo has not been able to get in touch with the Three Arrows Capital founders, who appear to have vanished.

As a final measure, the liquidator is attempting to obtain authority to serve subpoenas to the individuals who co-founded the company. 

In the same interview with Bloomberg, the liquidator offered the following commentary on the same topic:

“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.”

The situation could worsen for Three Arrows Capital as a result of this.