The co-founders of the defunct cryptocurrency hedge fund Three Arrows Capital are currently seeking investors for a new project that aims to profit from the industry’s growing number of bankruptcies.
In a pitch deck for a distressed debt marketplace called GTX, Kyle Davies and Su Zhu are mentioned as founder members. Three Arrows Capital, a $10 billion hedge fund based in Singapore that was created by Davies and Zhu, filed for bankruptcy in July. A British Virgin Islands court issued a liquidation order for the fund, popularly known as 3AC, after it became unable to pay its lenders due to a decline in prices and hazardous trades.
The founders of Three Arrows are currently navigating their own contentious bankruptcy as they make their new investor pitch. Davies and Zhu have been charged with refusing to cooperate with the liquidation process by advisors attempting to wind up 3AC. Last Monday, the advisers claimed that the co-founders’ whereabouts were still a mystery and served them with a subpoena via Twitter.
Davies and Zhu are a part of a group that says there should be a public market for the so-called crypto “claims” market, which refers to bankruptcies that affect owners of digital currencies. Several well-known companies in the space have filed for bankruptcy, including BlockFi, Celsius, Three Arrows, and most recently, FTX.
The new market aims to attract more than one million FTX depositors who are currently embroiled in a bankruptcy case. According to the report, a lot of those FTX clients are trying to avoid what may be a lengthy wait for payback by selling claims at a value of around one-tenth of their worth.
They claimed there was an “obvious need to unlock” the $20 billion claims industry, which they believe GTX could “dominate” in two to three months. In its pitch, GTX claimed that, if expanded, the platform could enter the securities lending industry and fill the “power void created by FTX” in cryptocurrency trading.
According to the report, GTX is raising $25 million for the platform with the intention of launching it no later than the end of February.
Along with Davies and Zhu, Mark Lamb and Sudhu Arumugam, co-founders of the cryptocurrency trading platform CoinFLEX, are mentioned as founding members.
The GTX deck also names Kent Deng as CTO, Leslie Lamb as CMO, and Ewelina Mielecka as the chief digital officer in addition to the four original members. According to the report, GTX has a team of more than 60 developers.
