FTX claimants bite into new crypto venture by founders of failed Three Arrows Capital

The new platform set up by Three Arrows Capital co-founders Kyle Davies and Zhu Su is deemed highly risky and ridiculed on social media. PHOTO: REUTERS

SINGAPORE – Some claimants of bankrupt cryptocurrency exchange FTX are banking their hopes on recovering some money through a new venture set up by the co-founders of prominent bankrupt cryptocurrency hedge fund Three Arrows Capital (3AC).

Announced early on Friday on Twitter, Open Exchange (OPNX) has received 2,000 sign-ups, most of whom are people with bankruptcy claims against Temasek-backed FTX.

The new platform, deemed highly risky and ridiculed on social media, is being set up by 3AC co-founders Kyle Davies and Zhu Su, both of whom are Singapore citizens. They have joined the co-founders of restructured crypto exchange CoinFlex, Mr Mark Lamb and Mr Sudhu Arumugam, to set up this venture.

On its website, OPNX describes itself as the world’s first exchange for trading bankruptcy claims and crypto.

It says it accepts users with claims against failed crypto entities, including BlockFi, Celsius Network, FTX, Genesis Trading, Mt Gox, Voyage Digital and 3AC.

Mr Zhu told The Straits Times that the exchange, now limited to those with bankruptcy claims, will officially launch in “the next few weeks”.

“We are now focused on the product launch in the coming weeks,” he said.

In a sales pitch leaked in January, the exchange was initially called GTX, a play on FTX, whose founder Sam Bankman-Fried is now facing multiple criminal charges in the United States.

In mid-January, the OPNX team was reportedly looking to raise US$25 million (S$33 million) for the new venture.

Some industry players have told ST that the idea to tokenise the bankruptcy claims of FTX is interesting, but many more warned of the high risks of trading in insolvencies.

Still, the risky idea is catching on in the crypto space, which has been greatly hurt by a string of high-profile crashes in 2022 that wiped out billions of retail investors’ money.

Mr Justin Sun, who leads Singapore-based crypto exchange Huobi Global, is the latest to tap the insolvencies market to create liquidity.

Mr Sun, who is also the founder of decentralised blockchain system Tron, announced in a tweet on Sunday that Huobi has listed FTX users’ debt tokens, or FUD, on its exchange, allowing creditors of FTX to trade their debt in the open market.

Huobi is currently undergoing a round of layoffs, like many other crypto players such as Amber, Coinbase, Crypto.com and ConsenSys, the developer of crypto wallet MetaMask.

The crypto rout has resulted in lender Genesis filing for bankruptcy protection in January. Genesis had clocked crippling losses from the collapse of FTX and 3AC, and the group had slashed its workforce before filing for Chapter 11 bankruptcy.

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