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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 statement, TPS said that, “TPS has its own independent operations and was acting as an agent with respect to the 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.