Offshore Entities Untethered from Singapore Control: Are These British Virgin Islands Companies the Essence of 3AC?

Three Arrows Capital, known for its high leverage investment strategy and heavy involvement in LUNA, suffered a massive liquidation of its investment positions, leading to several lending companies facing financial difficulties. The creditors of 3AC have initiated the liquidation of the company's assets in the British Virgin Islands court, followed by Three Arrows Capital declaring bankruptcy in the United States to prevent its assets from being frozen.

Although Three Arrows Capital and its co-founder Su Zhu are well-known for being primarily based in Singapore, the Monetary Authority of Singapore (MAS) announced on September 1, 2021, that the fund management authority has been transferred to an offshore entity in the British Virgin Islands, with fund management activities in Singapore ceasing from May 6 this year. At the end of June, MAS took significant action to condemn Three Arrows Capital's Singapore-registered company TAC for managing funds beyond regulatory limits. As of the end of 2020, the total assets reported by 3AC to the Singapore government were only $2.36 million, with an annual profit of approximately $830,000.

However, CoinDesk speculates that some companies registered in Singapore and the British Virgin Islands may be hidden from the spotlight, making it more challenging for creditors to claim their rights.

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Is it a clone of the British Virgin Islands?

According to CoinDesk's investigation, besides managing assets worth hundreds of billions, Three Arrows Capital also operates an over-the-counter (OTC) trading business through a capital company named TPS Capital, also known as "Tai Ping Shan." Based on the Singapore registration documents, ownership of this company is divided between Three Lucky Charms Ltd, registered in the British Virgin Islands, holding 47.5%, TPS Research with 47.5%, and Tai Ping Shan Ltd. registered in the Cayman Islands with 5%.

CoinDesk also discovered that TPS Capital had previously referred to itself as the official OTC platform of "Three Arrows Capital," but this introduction has since been removed.

Due to the British Virgin Islands' laws allowing corporate directors to remain undisclosed, the relationship with the individuals responsible for Su Zhu and Kyle Davies of 3AC remains uncertain. However, sources familiar with CoinDesk indicate that TPS holds and trades most of Three Arrows' funds, making it the operational arm of Three Arrows Capital. Despite Three Arrows having declared bankruptcy, trading continues through TPS.

Complex corporate structure increases liquidation difficulty

CoinDesk believes that the complex structure of funds behind Three Arrows and potentially related companies could pose challenges in seeking accountability through legal actions.

However, the name association with 3AC, such as "Tai Ping Shan" due to Su Zhu's background in Hong Kong, "Three Lucky Charms" with a naming logic similar to 3AC, or TPS previously claiming to be the official OTC of 3AC, does not directly prove a connection to 3AC. Further disclosures are necessary to verify such claims.