Founders of Bankrupt Crypto Hedge Fund 3AC Mocked After Pitching New Venture

Founders of currency hedge cryptofunds Three Arrows Capital, that inflicted losses of up to billions of dollars on investors and lenders as a result of last year's implosion, Looking for money for a start-up company. Judging from the reactions on Twitter crypto, they are confronted with a difficult battle. 

Su zhu and kyle davies seek to raise approximately $25 million for a crypto exchange called gtx that will concentrate on trading in crypto claims, based on a presentation for the proposed company as viewed by Bloomberg News. They’re teaming up with the founders of CoinFLEX, a digital-asset exchange that filed for restructuring in the Seychelles in August. 

The irony that Zhu and Davies — who spent months publicly sparring with 3AC liquidators working to recover assets for creditors — want to get into the business of crypto claims wasn’t lost on detractors. A lot of tweets about the similarity between the name suggested by gtx and ftx, the crypto exchange that broke down in November, including the founder, sam bankman-fried, has been alleged to have committed crimes, including fraud. 

The project proposed by Zhu and Davies "is similar to the return of arsonists to the crime scene and offers to indict their victims for buckets of water", Nic Carter, a partner of Castle Island Ventures, a crypto venture capital corporation, said by e-mail. 

Wintermute's founder, one of the world's leading crypto marketers, went so far as to suggest that any investor in the planned fundraising could put their relationship with their company at risk. 

Davies and Zhu declined to comment. "Our focus is on building, adding new products and asset classes to give more people access to capital markets," said the co-founder of coinflex sudhu arumugam. 

As news of the fundraising began spreading online on Monday, the outpouring of vitriol was such that CoinFLEX released a statement to “clarify misconceptions” about the proposed venture. Among the points he highlighted: the company will not be called gtx, which was chosen as a "reserved space name," according to the publication. 

3AC’s failure was one of the most damaging events in a year marked by crypto implosions, from the TerraUSD stablecoin meltdown in May to the FTX bankruptcy in November. Its creditors include the Digital Money Group, the parent crypto-brokerage company's genesis, which filed a $1.2 billion claim against the hedge fund.

After wagering in the wrong direction on the digital chips overturned 3AC in June, Zhu and Davies first went calm, and their current location remain unknown. 

But in recent months, both are making themselves heard more and more on Twitter, frequently using the social media platform to fight with executors from 3ac to teneo, accused of not cooperating in the conduct of the process. An official from teneo refused to comment. 

• Read more: 3AC Liquidators Demand Documents From Founders Via Twitter (1)

Zhu and Davies are offering some of 3AC’s creditors the option of converting their claims into equity in the new venture, according to minutes from a Jan. The Bloomberg News Creditors' Meeting. Zhu himself filed a claim in the 3ac bankruptcy, while the wife of davies is registered as a creditor. 

"We expect that many institutional investors will not be willing to invest in a new business of 3ac co-founders until all legal and regulatory issues pending with 3ac, inside Singapore as well as outside Singapore, are committed," said Holland, in association with the Netherlands.

— With assistance by Emily Nicolle