Co-founders of collapsed crypto hedge fund Three Arrows Capital (3AC) have vowed to pay earnings from their new venture, Open Exchange (OPNX) to creditors. During a Twitter Spaces on Monday 3 July, co-founder Kyle Davis said it’s “good karma” to make such donations.
Davis described the move as a first of its kind gesture, which depends on the creditors supporting the new venture, OPNX.
If there are some that don’t want to deal with us, then they don’t have to,” Davis said in a statement. We very much believe that if we do good and we say to creditors who lost money, they have a way to make more back. If we do bad and they do well, then that’s great. And that’s good karma, or whatever you want to call it,” he added.
3AC was a Singapore-based crypto hedge fund that had $18 billion in assets under management at some point. However, things went south last year when Luna’s algorithmic stablecoin, UST, crashed. 3AC as a result got liquidated and went bankrupt, going down with a lot of creditors’ money.
In the series of crypto firms that collapsed in 2022, 3AC was the first to go down, and filed for bankruptcy in June. The collapse also led to the collapse of Voyager Capital, a crypto lending platform that 3AC was owing hundreds of millions of dollars.
The co-founders have however bounced back and started a crypto exchange, OPNX and is soliciting for the help of its creditors to be able to pay them back. Even though the liquidation for 3AC is still ongoing, Davis says there’s a connection between the two ventures, and the creditors only stand to gain from OPNX.
Liquidators Reply Davis
Davis’ comments did not impress the crypto community, and specifically the liquidators. A spokesperson for one of the liquidators, Teneo, said that the co-founders should instead comply with court orders and support creditors in the ongoing liquidation instead of making new promises from a new venture.
“The founders of Three Arrows have willfully ignored multiple requests to assist with this process after initiating the liquidation themselves, and the court records paint a clear picture of the ways in which they have hindered creditor recoveries. Instead of promising creditors future earnings from a nascent venture, we would recommend that the founders engage in the court-ordered activities already underway,” he said.
The co-founders have also received backlash from the crypto community for coming up with a new venture while ignoring their responsibilities to the creditors of 3AC. From the prevailing sentiments, OPNX may have a hard time getting off the ground as no support is likely to come from the creditors or the crypto community.
