Tai Ping Shan (TPS) Capital created a complicated corporate structure that obscured its relationship with Three Arrows Capital, and later denied any connection aside from “passive investment,” claiming it was independent. But court filings prepared by Three Arrows’ liquidators show the two are tightly connected.
In a prior statement, TPS said that “Our most recent dealing with 3AC was limited to acting as an agent of loans between lenders and 3AC.” However, court documents show it was actually Three Arrows acting as a guarantor for TPS for loans on which it later defaulted, according to demand letters referenced in court filings.
The revelation adds new details to the tangled web surrounding the former Singapore hedge fund, which couldn’t sustain the pressure of a rapidly onsetting bear market and the collapse of Luna.
According to one demand letter found in court filings, TPS Capital took out a USDC 20 million loan from Arrakis Capital in late April and defaulted on it in mid-June as TPS was unable to honor a margin call for its trading account, contribute additional capital, or begin repayment of the loan.
A similar structure listing Three Arrows as a guarantor for a TPS Capital loan was found in a demand letter issued by Mirana Corp., a Seychelles-registered crypto fund, for a loan made in early June.
Term sheets for the loans were not included in the filed court documents.
According to the document, the loan required TPS Capital to contribute additional capital should the price of bitcoin decline by more than 10% since the origination of the loan. In addition, by June 14 the price of bitcoin breached the margin call level of $23,510, yet TPS did not respond to the lender’s attempts to contact it.
Mirana then sued Three Arrows in Singapore, but filings at the time did not mention TPS Capital.
As TPS Capital received demand letters from its creditors, court documents, citing on-chain data, show that Three Arrows transferred $31 million in crypto to a wallet controlled by TPS Capital.
While the amount is similar to that owed by TPS Capital to creditors, it's not known if that was the intent of the fund transfer.
The court filing also notes that Three Arrows transferred USDT 10.9 million to an otherwise unknown address, which then transferred it to a second unknown address.
In the case of Mirana’s loan to Three Arrows, all correspondence was directed to Three Arrows co-founder Kyle Davies. For Arrakis’ loan, it was directed to Ningxin Zhan, who is listed as an authorized agent for TPS and an operations contact at Three Arrows.
Three Arrows’ Founders at the Top of Org Charts
Despite claims of being passive investors, Three Arrows’ founder Su Zhu, and Kelly Kaili Chen, spouse of Kyle Davies, own over 80% of TPS’ BVI entity, which in turn owns 47.5% of the Singapore parent.
This wasn’t previously known, because BVI law directors and shareholders of a company in the territory aren’t publicly disclosed.
Another firm called “Three Lucky Charms Ltd” owns an equal amount of shares, but this company isn’t mentioned in the court filing.
Caymans-registered Tai Ping Shan, which owns 5% of the Singapore entity TPS Capital, lists Paul Muspratt, the managing director of West Bay Global Services, a corporate services provider, as one of its directors, alongside Steven Sokohl, another West Bay employee, and Yi Long Fung as directors.
Muspratt, Sokohl, and Fung are also listed as directors of ThreeAC Ltd, the managing fund of all of Three Arrows’ entities.
Aside from the role as director with ThreeAC Ltd, Fung isn’t mentioned again in the court document. According to a directory of Canadian federally incorporated businesses, he is listed as a director of TPS Capital’s Canadian-registered entity, which operates by the same name and was founded in February 2022.
Three Arrows is due back in court in Singapore on July 26 for a pre-trial conference regarding the Mirana lawsuit. Meanwhile, in the United States, the case continues before U.S. courts in New York on July 28. Neither Three Arrows nor TPS Capital has declared bankruptcy in Singapore as of the evening of July 19 Asia time, according to the Singapore Insolvency Office.