Are you a high risk investor looking to bet on a fugitive with a high profile bankruptcy under your belt? Well, a new proposed crypto exchange named GTX might be right for you.
The Block reported on Monday that Su Zhu and Kyle Davies, founders of crypto hedge fund Three Arrows Capital (3AC), distributed a slide deck to potential investors describing a new exchange that would allow creditors to buy and sell claims on bankrupt crypto companies- including 3AC.
Davis and Zhu are under multiple criminal and regulatory investigations into 3AC, which collapsed last June after making a major bet on a stablecoin project called Terra. The founder of 3AC, who is believed to be hiding in Dubai and Bali, is the subject of a New York magazine profile that mocks his investment ineptitude and lavish personal lifestyle.
According to the slide deck, which was also reviewed by The Wall Street JournalDavies and Zhu believe the market for claims on bankrupt crypto companies—which also includes names like Celsius, Voyager and FTX—is worth at least $20 billion.
Since the bankruptcy process usually takes years to play out and the final payment is uncertain, many creditors choose to sell their claims to investors who hope to cash in later.
In this light, if Zhu and Davies’ estimate of $20 billion in crypto claims is even roughly accurate, the proposed business could make sense. But the part will find investors to support the project and, based on the reaction on Twitter, confidence in the pair is not high.
Respected crypto lawyer Jake Cherinksy observes that, if you invest in transnational fugitives, “you deserve to lose every dollar you have.”
Meanwhile, the name of the proposed crypto bankruptcy exchange does not inspire. “GTX” appears to be a riff on FTX—an exchange that’s a giant Ponzi scheme.
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