Su Zhu and Kyle Davies want to launch the GTX exchange, banking on the failures of current crypto companies, such as FTX, and future ones. They are looking to raise $25 million.
Surfing on the recent bankruptcies of Celsius, BlockFi and FTX when you’ve been bankrupt yourself, you had to dare.
Su Zhu and Kyle Davies, the co-founders of the investment fund Three Arrow Capital (3AC), did it.
The former traders want to launch a trading platform called “GTX”, in a nod to FTX, “because G comes after F”, according to their lunar presentation document.
Because one has to find a niche to redeem oneself, GTX intends to capitalize on current and upcoming bankruptcies in the crypto ecosystem.
As a reminder, when a company goes bankrupt, customers can decide to sell their debts to companies or investment funds, in order to have immediate liquidity, without waiting too long. We see this for example with Mt Gox, a crypto exchange platform in bankruptcy since 2014, with customers able to expect a refund at the earliest in 2023, 10 years later…
Because one has to find a niche to redeem oneself, GTX intends to capitalize on current and upcoming bankruptcies in the crypto ecosystem.
As a reminder, when a company goes bankrupt, customers can decide to sell their debts to companies or investment funds, in order to have immediate liquidity, without waiting too long. We see this for example with Mt Gox, a crypto exchange platform in bankruptcy since 2014, with customers able to expect a refund at the earliest in 2023, 10 years later…
Here, the former founders of 3AC think they have found a solution, creating an exchange platform that would link cryptocurrencies and customer receivables, all with high-risk speculation. In concrete terms, the platform would bring together users who want to redeem the claims of customers, while the latter can give up their claims on GTX and receive a stablecoin called “USGD” in exchange.
A stablecoin that would almost resemble the USDT, which collapsed a few months ago. But never mind.
In their presentation document, Celsius, BlockFi, Mt Gox, but especially FTX are cited as examples of companies where it is good to buy claims. GTX evaluates this market at 20 billion dollars, on which other companies are already present, like XClaims or Claims-Market. Of course, GTX assures that its prices will be much lower than its competitors. To embellish all this, GTX specifies that it already has a team of 60 developers at its disposal and that it has formed a partnership with the crypto exchange platform CoinFlex.
Risky bet
The team hopes to launch the project within a month, raising $25 million from investors. But what investor could possibly trust the founders of 3AC, who have proven to be rather unexampled in recent months?
As a reminder, founded in 2012, 3AC was one of the largest investors in the crypto ecosystem, which ensured to manage up to $ 10 billion in assets.
The fund invested in blockchains such as Bitcoin, Ethereum or even in the Terra Luna ecosystem. Bad luck: following the collapse of Terra Luna, the fund found itself unable to repay its creditors in mid-June. Indeed, 3AC owed more than 3.5 billion dollars to its 27 creditors, including Genesis Global Trading and Voyager Digital. Failing to do so, 3AC went bankrupt on June 27, with the British Virgin Islands court ordering its liquidation.
But today, the former founders of 3AC would rather focus on GTX than face their responsibilities.
“Advisors working on the liquidation of 3AC have accused Davies and Zhu of not cooperating with the liquidation process. Last week, the advisors subpoenaed the co-founders on Twitter, claiming they were still not located,” The Block reports.
“Converting their debts”
The former founders of 3AC want to go even further, linking their current project to their former bankrupt company.
“Zhu and Davies are proposing to some 3AC creditors that they convert their claims to shares in the new company, according to minutes of a Jan. 11 creditors’ meeting,” Bloomberg reports.
Many institutional investors will not be willing to invest in a new venture by 3AC’s co-founders until all outstanding legal and regulatory issues surrounding 3AC, both inside and outside Singapore, are resolved,” said Chris Holland, a partner at Holland & Marie, who was interviewed by Bloomberg.