The founders of bankrupt Three Arrows Capital introduce a brand new platform for crypto debt claims
FTX logo with $100 bill crypto coins displayed for illustration. FTX has filed for bankruptcy in the US and is seeking protection in court as it seeks a way to return funds to users.
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The co-founders of failed cryptocurrency hedge fund Three Arrows Capital are now soliciting investors for a new venture that aims to capitalize on a growing list of bankruptcies in the space.
Kyle Davies and Su Zhu are listed as founding members in a pitch deck obtained by CNBC for a distressed debt marketplace called GTX. Davies and Zhu founded Three Arrows Capital, a Singapore-based once $10 billion hedge fund that filed for bankruptcy in July. The fund, also known as 3AC, was ordered into liquidation by a British Virgin Islands court after falling prices and risky deals meant it was unable to repay lenders.
The new investor pitch comes as the founders of Three Arrows navigate their own controversial bankruptcy. Advisors working on 3AC’s liquidation have accused Davies and Zhu of not cooperating with the liquidation process. The advisors served a subpoena on the co-founders via Twitter last week, claiming their whereabouts are still unknown. Three Arrows officials did not immediately respond to CNBC’s request for comment.
The Block first reported on the 3AC founders’ plans for a new exchange.
Davies told CNBC in November he was in Bali and dismissed claims he and his co-founder were not cooperating.
“We worked together all the time,” he said in an interview with CNBC’s Squawk Box.
Davies and Zhu are part of a group arguing that the so-called crypto “claims” market should have a public marketplace regarding bankruptcies affecting digital currency holders. The space has seen a handful of high profile bankruptcies including BlockFi, Celsius, Three Arrows and most recently FTX.
The new marketplace is designed to appeal to the more than one million FTX depositors who are now embroiled in bankruptcy proceedings, according to a slide in the pitch deck. Many of these FTX clients are selling receivables at about a tenth of their value for instant liquidity as they try to avoid potentially years of waiting for repayment, the deck said.
They cited a “clear need to break into the claims market,” a market they estimate at $20 billion, and believe GTX could “dominate” within two or three months. GTX said in its pitch that once the platform scales, it could fill a “power vacuum left by FTX” in crypto trading and enter the securities lending market.
According to the deck, GTX is raising $25 million for the platform with a goal of launching by the end of February at the latest.
Mark Lamb and Sudhu Arumugam, co-founders of crypto trading platform CoinFLEX, are listed as founding members alongside Davies and Zhu. CoinFLEX officials did not immediately respond to CNBC’s request for comment.
In addition to the four founding members, the deck lists Kent Deng as CTO of GTX, Leslie Lamb as CMO, and Ewelina Mielecka as Chief Digital Officer. According to Deck, GTX has a team of more than 60 developers.
— CNBC’s MacKenzie Sigalos contributed to the coverage