GTX brings Act 2 of crypto circus

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Hi there,

For what feels like an eternity, FTX has been dominating crypto headlines, leaving us all feeling suffocated. For a change of pace, we have a new announcement from the folks who brought you Three Arrows Capital (3AC).

To recap the disaster that was 3AC last year: the Singapore-based “crypto hedge fund” was forced into liquidation after it failed to meet margin calls. The collapse took down several crypto players whose only fault was lending money to 3AC.

Since the fund filed for bankruptcy last year, its founding team, including Su Zhu and Kyle Davies, have been on the run and refusing to talk to investigators.

Now, the big brains behind that fiasco are back with a new crypto exchange – and they’ve brought along some familiar faces. Mark Lamb and Sudhu Arumugam, the founders of CoinFLEX – a crypto exchange that also sought bankruptcy protection last year – will be joining Zhu and Davies for the new venture.

So brace yourself for Act 2 of the Zhu and Davies crypto circus.

The new firm, tentatively called GTX, will trade bankruptcy claims from creditors of failed crypto companies.

The name of the exchange is a play on “FTX,” with one of the pitch decks stating “because G comes after F.” The jokes write themselves at this point.

Ironically, 3AC’s own US$3 billion in bankruptcy claims – which includes Davies’ wife as well as Zhu himself as creditors – could potentially be traded on the exchange.

GTX’s pitch also reveals that the crypto assets in the bankruptcy dispute are currently valued at up to US$20 billion, primarily from platforms that have failed in the past such as FTX, BlockFi, and Celsius.

After a tough 2022, it may be a challenging task for crypto companies to regain investor trust and shake off negative reputations, even if some of them are undeserved.

Even as Zhu and Davies are building their new venture, another crypto platform looks like it could potentially mimic the fates of UST and FTX. This latest problem comes in the guise of an algorithmic stablecoin. Act 3, anyone?

– Deepti

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