Three Arrows Capital Gets Jumbled up With the SEC and CFTC

• The SEC and the CFTC are fully hands-on, in an investigation of the failed hedge fund Three Arrows Capital (3AC).
• The bankruptcy became popular when Bitcoin (BTC) and Ethereum (ETH) nosedived 70% from their record highs amid the economic meltdown.

The Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) are investigating Three Arrows Capital (3AC) for possible violations of investor protection rules.

3AC is a cryptocurrency hedge fund that filed for bankruptcy in July after suffering heavy losses during the recent crypto market crash. The SEC and CFTC are reportedly looking into whether 3AC misled investors about the strength of its balance sheet and whether it failed to register with the agencies.

The CFTC’s jurisdiction over crypto is generally limited to derivatives, but the agency can take enforcement action if it believes there is fraud or manipulation in the underlying market. The SEC has jurisdiction over digital coins that qualify as securities under its rules. Both regulators also oversee investment firms.

In addition to the SEC and CFTC, the Monetary Authority of Singapore (MAS) is also investigating 3AC for allegedly providing false information and exceeding the limit on its assets under management.

The scrutiny of 3AC is part of a broader crackdown on cryptocurrency fraud and manipulation by US regulators. In recent months, the SEC and CFTC have also taken enforcement actions against other cryptocurrency firms, including Celsius Network and BlockFi.

The SEC and CFTC are stepping up their enforcement in the cryptocurrency space in response to the growing popularity of digital assets. As the crypto market continues to grow, it is important for investors to be aware of the risks and to protect themselves from fraud.