OPNX FUD Grows in the Aftermath of Three Arrows Capital’s Meltdown

Fear, uncertainty, and doubt (FUD) around Open Exchange (OPNX) have peaked as Dubai’s new digital assets watchdog pursues action against it. Last week, Dubai’s Virtual Assets Regulatory Authority (VARA) was still trying to collect a May fine of 10 million dirhams ($2.7 million) for breaking its crypto rules.

OPNX first launched in the ashes of Three Arrows Capital (3AC) as a platform for users to trade bankruptcy claims for failed projects like FTX. However, as per multiple reports last week and this week, OPNX has not paid up.

OPNX in the Red

The newly minted digital assets regulator accuses the exchange of violating existing rules and failing to seek proper registration. Any entity in Dubai that invests a minimum of $250,000,000 (or equivalent) within a thirty-day period is considered a “Large Proprietary Trader” (LPT). LPTs are legally required to register with VARA.

The regulator has imposed a $54,000 fine on OPNX’s co-founders Kyle Davies, Mark Lamb, and Su Zhu, as well as its CEO, Leslie Lamb. Reportedly, further action may include further fines and sanctions.

However, OPNX doesn’t seem much bothered. Since VARA confirmed on Wednesday that the exchange still owes, there has been little public acknowledgment from OPNX leadership of the legal drama.

Since last Wednesday, OPNX’s token OX is down about 18%, according to CoinMarketCap.

OX token performance over the previous seven days. Source: CoinMarketCap.

OPNX Has Drawn Heavy Criticism

The OPNX platform was first introduced in January, under the name GPNX. An effort to resurrect the failed hedge fund, 3AC, could hardly avoid criticism, given the spectacular nature of 3AC’s collapse and the number of investors who got burned.

Since then, the project has run into trouble and gathering FUD. Many view it as a crude attempt to make money from others’ misfortune.

OPNX allows individuals to trade bankruptcy claims through tokenization. One of its founders, Kyle Davis, has said part of the proceeds will be donated to the victims of 3AC’s collapse.

But that did not quite make everyone happy. Many on X (formerly Twitter) have called the project’s founders as scammers for their role in 3AC.

Observers have criticized the group for poor investment and organizational decisions. Following its collapse, the co-founders, Davies and Zhu, were unhelpful in the investigation and withdrew from social media.

Ripple’s former head of engineering, Nick Bougalis, criticized the project in the harshest terms.

“So @zhusu and Kyle Davies are trying to steal more money!” he tweeted. “[On] the one hand, I can’t say I’m surprised: scammers gonna scam. But on the other hand, this is so far beyond insane that there’s no word for it. The hubris and arrogance of these [expletive] truly knows no bounds.”

3AC once managed $10 billion in crypto assets. But on July 2, 2022, the former hedge fund filed for Chapter 15 bankruptcy.

The firm was well known for its highly leveraged bets on the crypto markets. However, when crypto prices collapsed last year, the once-towering behemoth was one of the players to fall. Unfortunately, all the volatility exposed a severe liquidity crisis at the fund.

The hedge fund’s collapse had serious knock-on effects for thousands of investors across the crypto market.

“Scammers Gonna Scam”

Although now, it appears as if 3AC is back from the dead, at least in some fashion. The founders have used the 3AC name and logo for a new project, 3AC Ventures, a new venture capital fund. Observers have criticized the move, saying it shows a lack of sensitivity on the part of the founders.

As for Zhu and Davies, bad news appears to be following the duo around. In June, their new project attracted significant negative attention as community members challenged its trading volumes. With a past like theirs, FUD around the new exchange and its top team is unlikely to stop anytime soon.

BeInCrypto has reached out to OPNX for comment.