Crypto carnage continues

Company News

by Glenn Dyer

Bitcoin dropped 6.1% to $US18,866.77 late on Thursday in a new round of weakness.

That came as the Monetary Authority of Singapore (MAS) issued a rare public rebuke to the Three Arrows Capital group which is now in liquidation after being unable to meet investor calls.

Bitcoin’s fall took it down $US1,226.41 from its previous close and down 60.9% from the year’s high of $US48,234 on March 28 – a month after the invasion of Ukraine by Russia.

Ether, the coin linked to the ethereum blockchain network, lost 7.5% to $US1,016.08 on Thursday, losing $US82.38 from its previous close.

Both cryptos have struggled since US based lender Celsius Network last month said it would suspend withdrawals.

In an effort to try and convince investors and others that it is still alive, Celsius posted a comment on its blog on Thursday in which it claimed “we are focused and working as quickly as we can to stabilise liquidity and operations, in order to be positioned to share more information with the community.

“Celsius said these actions could include “pursuing strategic transactions” and “restructuring its liabilities” among other strategies.

“These exhaustive explorations are complex and take time, but we want the community to know that our teams are working with experts from many different disciplines,” Celsius wrote.

Celsius didn’t make any comment on the fate of the money lodged with the lender and then lent to other crypto companies.

Bitcoin and ether were further rattled by the apparent insolvency of Three Arrows Capital was ordered into liquidation by a court in the British Virgin Islands on Monday.

This week Teneo, the consultancy, was appointed as joint liquidator for Three Arrows in the British Virgin Islands, where the sole fund it managed was based.

The MAS rebuke was stunning in that the central bank is notoriously closed mouth when it comes to communicating decisions, especially in the sensitive areas of prudential regulation and stability.

So the MAS statement reprimanding Three Arrows Capital for filing false information has to be taken very seriously.

The Authority said on Thursday that Three Arrows had breached its allowed threshold for $S250 million assets under management. It also said the fund manager had failed to notify it of changes to directorships or shareholdings.

MAS said Three Arrows had been under investigation for a year. “In light of recent developments which call into question the solvency of the fund managed by Three Arrows, MAS is assessing if there were further breaches by Three Arrows of MAS’ regulations,” it said.

The company became a registered fund management company in Singapore in 2013, permitted to manage assets of up to $S250 million. MAS said Three Arrows has exceeded the limit twice, between July and September 2020 and between November 2020 and August 2021.

At the start of September last year Three Arrows shifted the management of its sole fund to an offshore entity in the British Virgin Islands. However it failed to notify the Singapore regulator that Zhu was also a shareholder of the BVI entity.

Earlier this week Canadian crypto broker Voyager Digital issued Three Arrows with a default notice after failing to make good on a $US650 million loan. The loan was made up of approximately $US350 million worth of USDC — a stablecoin — as well as more than 15,000 bitcoin (now sharply lower in value).

Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

Are you a 708 sophisticated investor?

A sophisticated investor is defined under Section 708 of the Corporations Act (net assets of $2.5 million or annual incomes in excess of $250,000).

They are eligible to receive information regarding wholesale investment opportunities that are not available to regular or retail investors.

Please subscribe if you would like to be alerted to these types of opportunities.