US Watchdogs Probe 3AC as its Founders Remain Missing

According to a recent report, the SEC is teaming up with the CFTC to probe deep into the troubled bankruptcy of Three Arrows Capital. The US agencies are allegedly investigating a wide array of possible violations.

SEC and CFTC Team Up to Investigate Three Arrows Capital

Three Arrows Capital is one of the biggest casualties of the massive Terra LUNA collapse in May. The company entered its death spiral in June when a British Virgin Islands court ordered its liquidation, and the company filed for bankruptcy in July.

While the collapse caused an immediate reaction from the Singaporean authorities, the failed hedge fund also found itself in the crosshairs of US watchdogs. Both the Securities and Exchange Commission and the Commodity Futures Trading Commission are looking into the company’s activities.

Allegedly, the regulators are probing both whether 3AC mislead investors on the stability and strength of its balance sheet and on whether the hedge fund failed to register with appropriate agencies. If found guilty, Three Arrows Capital might soon face various fines and other penalties.

Three Arrows Founders Might Receive Subpoenas via Twitter

3AC’s bankruptcy appears to have been very troubled from the beginning. While the hedge fund’s founders claimed to have attempted to cooperate with liquidators already in July, more recent reports paint a different picture.

According to court-appointed liquidators the founders of 3AC, Su Zhu and Kyle Davies have both refused to fully cooperate, and have failed to disclose their location. According to another report from Monday, the founder’s lawyers are also refusing to accept subpoenas in their stead.

These circumstances have led the liquidators to take unorthodox measures. They have requested permission from the court to deliver subpoenas to Zhu and Davies via their email and Twitter accounts.

When Three Arrows Capital went under, it had an outstanding debt of $2.8 billion. By late July about $40 million of this amount was recovered—only 1.4%. The dire situation of the bankruptcy proceedings led 3AC’s creditors to request access to the hedge fund’s Singapore assets in late August.

This article originally appeared on The Tokenist