Crypto hedge fund Three Arrows Capital (3AC), which filed for bankruptcy in July, is being probed by the Commodity Futures Trading Commission and the Securities and Exchange Commission on whether it misled investors, Bloomberg News reported Monday.

The regulators are probing whether the Singapore-based fund over-stated the strength of its balance sheet and did not register with agencies, according to the report which cited two people familiar with the matter.

The probe is likely to lead to monetary fines and other penalties for the firm and individuals involved, the report said.

3AC, CFTC and SEC did not immediately respond to Reuters' requests for comment.

3AC was one of the more prominent crypto firms before its fall following a broad downturn in the digital currency market and the collapse of Terra blockchain.

The firm sustained losses on its position in the Terra blockchain project, which crashed after the stablecoin TerraUSD crumbled in May.

As the token's collapse spread across the broader crypto market over the following weeks, 3AC was unable to meet margin calls from its lenders and eventually declared insolvency.

The market crash also caused other firms such as Celsius Network, Voyager Digital and Vauld to fold.