3 - 5 minute read
The co-founders of Three Arrows Capital, a failed crypto hedge fund, have recently run into trouble over operating and promoting their new digital asset exchange, OPNX, without the required local license in Dubai. Su Zhu and Kyle Davies, along with two other executives of OPNX, received a written notice from Dubai’s Virtual Assets Regulatory Authority (VARA), stating that the newly found exchange is being investigated for violating laws. VARA claims that OPNX has been engaged in marketing the exchange in the country through social media platforms without establishing warranted restrictions for residents of Dubai/UAE.
This is not the first time that VARA has sent a cease-and-desist notice to OPNX. Despite the previous notices, OPNX launched on April 4th, and VARA issued an “investor and marketplace alert” against the exchange just days after its launch. The regulatory body has assured corrective measures would be taken against the firm for violating laws.
The association of OPNX with the failed crypto hedge fund and its co-founders, Su Zhu and Kyle Davies, has been a talking point in the crypto industry. The crypto community was baffled to see Zhu and Davies promoting a new venture and raising funds for the same, even though they are currently under investigation for the downfall of Three Arrow Capital.
Sudhu Arumugam of @OPNX_Official on the Role of Regulation in Maximizing the Benefits of Web3 and Digital Assets pic.twitter.com/Z75DOBQTv0
— 朱溯 (@zhusu) February 16, 2023
Zhu and Davies have reportedly backed away from any further association with OPNX and told Bloomberg that “while Kyle and I helped contribute the initial ideas for OPNX, Leslie is very much the CEO and we aren’t involved in the day-to-day.”
OPNX’s association with former 3AC founders has not helped its cause when it comes to fundraising. On April 24th, OPNX CEO Leslie Lamb blasted a number of venture capital firms on Twitter after some reportedly backed out of the venture. The exchange has earlier claimed that it was backed by the likes of AppWorks, Susquehanna (SIG), DRW, MIAX Group, China Merchant Bank International, and Token Bay Capital.
The implications of this issue for traders in the crypto market are clear. The lack of regulatory compliance by OPNX and its executives could lead to a decline in investor confidence, which could negatively impact the value of the digital asset. Traders must pay close attention to any updates from VARA regarding corrective measures taken against OPNX.
The Bottom Line
The regulatory issues faced by OPNX and its association with the failed crypto hedge fund Three Arrow Capital and its co-founders Su Zhu and Kyle Davies have raised concerns about the exchange’s compliance with regulations. Traders must keep an eye on any updates from VARA regarding corrective measures taken against OPNX, as this could have an impact on the digital asset’s value. It is always critical to prioritize regulatory compliance in the crypto market to maintain investor confidence.
