Journalists Uncover Link Between 3AC and Offshore Trading Desk

The bankruptcy-stage hedge fund Three Arrows Capital (3AC) continues active trading through its lesser-known unit Tai Ping Shan (TPS) Capital. CoinDesk reports this.

According to available data, 3AC managed a little-known OTC trading division, TPS Capital. Earlier on LinkedIn, this organisation was described as “the official OTC trading desk of Three Arrows Capital”. The description was later changed, leading to the two firms distancing themselves.

Registered in Singapore, TPS Capital is based in the British Virgin Islands.

According to registration documents, ownership is split between BVIs-registered Three Lucky Charms Ltd and TPS Research, and Tai Ping Shan Ltd, registered in the Cayman Islands.

Director names for these companies are not public, however sources point to a similarity between the names Three Lucky Charms and Three Arrows Capital, led by Su Zhu, Kyle Davis, and an unidentified third person.

The top management of TPS Research, which owns 47.5% of the Singapore entity TPS Capital, is also concealed.

Tai Ping Shan, which owns 5% of TPS Capital, lists among its directors the managing director of West Bay Global Services Paul Maspratt, West Bay employee Steven Sokol, and Yi Long Fung.

Yi is barely present online. He is listed as a director of a Canada-registered TPS Capital, which operates under the same name, founded in February 2022 and based in the Toronto suburb of Thornhill.

The billion-dollar hedge fund 3AC submitted a report to the Singapore government with modest income.

As of the end of the 2020 financial year, the aggregate assets of Three Arrows Singapore stood at SGD 3.3 million ($2.36 million), and annual profit was SGD 1.15 million ($823,015). About SGD 6.33 million ($4.50 million) was paid as dividends to Zhu and Davis.

Documentation for 3AC as of the end of 2021 is not publicly available.

According to SEC SEC, the Singapore and British Virgin Islands arms of Three Arrows split the purchase of a position in the Grayscale Bitcoin Trust (GBTC) in December 2020. According to the Monetary Authority of Singapore, the local entity received a license to manage SGD 250 million ($179 million).

An anonymous source said that TPS owns and trades the majority of Three Arrows’ assets. This is corroborated by another interviewee who says TPS is the “hub” for 3AC.

Based on the information obtained, TPS presumably continues to use the hedge fund’s capital for trading. However, the layered ownership structure and hidden directors may complicate investors’ attempts to recover damages from Three Arrows Capital in court.

Earlier in June, amid the crypto market rout, rumours of insolvency at Three Arrows Capital surfaced. 8 Blocks Capital accused the hedge fund of using client funds to cover margin calls.

Crypto broker Voyager Digital sent 3AC a notice of default due to non-payment of a loan.

The High Court of the British Virgin Islands ordered the liquidation of the hedge fund, and the Monetary Authority of Singapore announced a reprimand for providing false information and exceeding the permitted assets under management.

In early July, Three Arrows Capital filed for bankruptcy in New York court.

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