- 3AC founders have collaborated with CoinFLEX co-founders for the GTX Exchange.
- The new project will help creditors retrieve their funds locked in failed exchanges.
- Ex-Ripple CTO Nick Bougalis slams project.
Co-founders of the failed cryptocurrency hedge fund Three Arrows Capital Su Zhu and Kyle Davis announced a new project and Cryptographer Nick Bougalis strongly criticized it.
Ripple’s former CTO, Nick, accused Davies and Zhu of trying to scam people with their new venture.
“On the one hand, I can’t say I’m surprised: scammers gonna scam. But on the other hand, this is so far beyond insane that there’s no word for it.”
3 Arrows Capital collapsed last year, creating a chain of unfortunate events that intensified the crypto winter. The crypto investment firm has not absolved itself of its actions that led to its doom.
The co-founders of 3 Arrows Capital have collaborated with CoinFLEX co-founder Mark Lamb and Sudhu Arumugam to secure $25 million for the new project called GTX exchange. This will facilitate the creditors of failed crypto exchanges, like FTX, to get their funds back.
Theoretically, it is a good project and, if executed properly, would be very helpful in reinstating the lost trust in the system by providing a safety net.
Founded in March 2012, 3 Arrows Capital entered the crypto world in 2018. The crypto hedge fund, once managed nearly $10 billion worth of assets, was ordered to liquidate by the court of the British Virgin Islands on June 27, 2022. Bad trading strategies and a drop in crypto prices led to its demise.
At the start, the co-founders, Su Zhu and Kyle Davies were very active on Twitter, posting their views and strategies. Though some believe it was a psyops or mind game where the audience was influenced to trade in the other direction.
3AC invested heavily in TerraLUNA, buying 10.9 million LUNA worth $559.6 million, which now values at just $670. Somehow, they managed to survive the Terra ecosystem collapse, but two bad trades cost them dearly.
The first bad trade was GBTC: prices went down further when other ETFs came into the market. GBTC has been asking permission to convert into an ETF but is being denied by the Securities and Exchange Commission (SEC). 3AC believed that if it was permitted, the price would surely rise; but that ever happened. They had to liquidate their GBTC holdings to meet the demands.
The second bad trade was tokenized Ethereum or stETH, which was pegged to ETH. As this was not the case, its price plummeted, and players started dumping stETH, further reducing its price. Celsius also had some exposure to this and announced freezing withdrawals.
The news of 3AC’s failure came around the same time.
The co-founders were absent for quite a long time but appeared to say they were planning to sell their assets to repay and were looking for someone to take over.