Su Zhu and Kyle Davies, the founders of bankrupt hedge fund Three Arrows Capital (3AC), are preparing to launch a new exchange in tandem with the founders of CoinFlex, an exchange that is currently being restructured. To achieve this, they want to raise $25 million, but the reactions of the crypto community suggest a complicated return.
Three Arrows Capital is back on track
Three Arrows Capital (3AC) founders Su Zhu and Kyle Davies want to bring a new exchange into the world that would operate across various verticals, including cryptocurrencies, stocks, bonds as well as debt exchange.
This project is already in the pipeline, and would be conducted jointly with Mark Lamb and Sudhu Arumugam, the 2 founders of CoinFlex, a cryptocurrency exchange being restructured since last September.
Three Arrows Capital is a hedge fund that has been in the news a lot during 2022, notably for its unsuccessful investments in the Terra (LUNA) ecosystem, which has suffered the collapse we all know today.
In addition, the fund had also invested in Genesis Global Trading and Voyager Digital, but found itself unable to honour its claims. As a result, we have seen a chain of bankruptcies, with these players now in critical situations themselves. At last count, 3AC, which has been in bankruptcy since last summer, owes more than USD 3.5 billion to its various creditors.
To structure and set up the exchange, GTX’s founders are looking to raise no less than $25 million. In addition, according to the Wall Street Journal, some of 3AC’s creditors will be able to convert their claims into shares in the new company.
According to the information available, GTX should see the light of day “as soon as possible”, but its arrival could be envisaged for next February.
The launch is expected to be complicated
Naturally, reactions to this announcement have been more than mixed, if not unilaterally negative.
– ZachXBT (@zachxbt) January 16, 2023
Evgeny Gevoy, the CEO of market maker Wintermute, a company that trades more than $5 billion in assets daily as part of its mission, said his company would stay as far away from GTX as possible. He even went so far as to warn potential future investors:
“And since we’re talking about canceling things, if you invest in the Coinflex/3AC exchange, you might have a little more trouble working with Wintermute in the future (on the relationship-building side). “
He also adds:
“Also, we’re not going to be involved in any rounds where these guys are about to come to the negotiating table, so watch out for the founders. “
A warning that should not help the future exchange team in its quest for funds, as Wintermute is a major player in this ecosystem.
But according to 3AC’s founders, there is hope: they claim to be able to “dominate” the market they are aiming for and get their hands on $20 billion to do so, including taking over from FTX.
