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Founders pitch platform Three Arrows Capital for crypto bankruptcy declarations


FTX logo with crypto with $100 bill shown for illustration. FTX has filed for bankruptcy in the US, seeking court protection as it seeks to return users’ funds.

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The co-founders of a now liquidated crypto hedge fund are wooing investors for a new trading market that aims to capitalize on the growing number of crypto-related bankruptcies. number.

Kyle Davies and Su Zhu are listed in the founding member slide of a pitch obtained by CNBC for a struggling debt market called GTX. Davies and Zhu founded Three Arrows Capital, a crypto hedge fund based in Singapore. was ordered to liquidate by a British Virgin Islands court.

The deck notes that Three Arrows Capital “has gone bankrupt in 2022.” It was previously considered one of the most prominent crypto hedge funds that used to manage about 10 billion dollars in assets.

Tech watchers and financial exchanges are increasingly interested in how bankruptcies and frauds in the crypto space will be handled in the future. the collapse of FTX. Davies and Zhu are part of a group that argues that the so-called crypto “declaration” market, which deals with bankruptcies affecting holders of digital currencies, should have a public market. declare.

It aims to attract more than one million FTX depositors currently involved in a bankruptcy proceeding, a slide in the presentation said. According to the deck, many FTX clients are selling claim rights at about 1/10th of their value for immediate liquidity as they try to avoid what could be years of waiting for repayment.

They cite a “clear need to unlock” the claims market — a market they value at $20 billion and believe GTX could “dominate” within two or three months. GTX said in its offering that, once scaled up, the platform could fill the “power vacuum left by FTX” in crypto trading and move into the securities lending market. securities.

GTX is raising $25 million in seed funding for the platform, with the goal of hitting the market by the end of February, according to the deck.

Mark Lamb and Sudhu Arumugam, co-founders of cryptocurrency trading platform CoinFLEX, are listed alongside Davies and Zhu as founding members. Representatives for CoinFLEX and Three Arrows Capital did not immediately respond to CNBC’s request for comment.

In addition to the four founding members, the deck lists Kent Deng as GTX CTO, Leslie Lamb as CMO, and Ewelina Mielecka as chief digital officer. GTX has a team of more than 60 developers, according to the deck.

— CNBC’s MacKenzie Sigalos contributed reporting

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