The Monetary Authority of Singapore (MAS) on Thursday reprimanded crypto hedge fund Three Arrows Capital for breaching several regulations.

The MAS said that the fund had provided false information to the regulator, and had exceeded the assets under management threshold for a fund manager registered in Singapore.

The MAS’s comments come as Three Arrows faces a potential bankruptcy, and is in talks with restructuring lawyers for a way forward. It also indicates that the hedge fund’s potential insolvency is now in the crosshairs of major regulators.

The embattled hedge fund recently defaulted on a $660 million loan from Voyager Digital, highlighting just how strained its finances are.

MAS outlines several regulatory breaches by Three Arrows Capital

The MAS said in a statement that Three Arrows Capital had provided the regulator with false information over the nature of its management. The hedge fund said it had novated its management to an unrelated offshore entity- which was false, as founder Zhu Su is also a director of the entity.

Three Arrows Capital also did not notify the MAS of changes in the directorships and holdings of its owners- Su and Kyle Davies. Both the founders are now facing huge amounts of scrutiny over their alleged mismanagement of the hedge fund.

The MAS also said that Three Arrows Capital had exceeded its allowable assets under management limit of 250 million Singapore dollars ($179.6 mln) on two separate occasions.

The regulator is now assessing if there were more breaches by the fund.

Looming insolvency sends ripples across the market

Three Arrows Capital’s unwinding has had wide-reaching repercussions for the crypto market. The liquidation of its positions saw the selling of several major tokens on the open market, causing sharp losses in Bitcoin and Ethereum.

Exposure to Three Arrows Capital also saw two crypto brokers fall into dire straits. BlockFi and Voyager Digital both recently received a bailout from crypto exchange FTX after their liquidation of Three Arrows’ positions caused a liquidity crunch.

Several other lenders exposed to the hedge fund are also likely to experience more pain.

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