Three Arrows Co-Founders Are Back With a New VC Fund. Is Anyone Buying?

The recently launched Open Exchange (OPNX), a trading platform specializing in claims against bankrupt cryptocurrency entities, made waves on Wednesday as it revealed its latest ecosystem partner—one that uses the same name and the same logo as the now-bankrupt hedge fund Three Arrows Capital (3AC).

Details of the new entity, 3AC Ventures, are sparse, with a landing page stating it is “focused on superior risk-adjusted returns without leverage” and providing a contact email. In a Twitter post Wednesday, OPNX said the collaboration aims to provide investment support to projects that are developing within the OPNX ecosystem and “working towards a decentralized future.”

OPNX co-founder Kyle Davies told Decrypt that “3AC Ventures has launched with a focus on driving innovation and fostering wider adoption of crypto.”

What happened to Three Arrows Capital?

OPNX was established by Davies along with his business partner Su Zhu—better known as the co-founders of the now-defunct Singaporean hedge fund Three Arrows Capital (3AC).

3AC, which at one point had about $10 billion under its management, according to data firm Nansen, frequently used leveraged positions, meaning exchanges allowed it to trade with more funds than it actually had in hand. It’s a risky strategy—and one that didn't work for 3AC in the long term, with the firm eventually filing for bankruptcy in July last year.

Three Arrows Founders Roll Out Bankruptcy Claims Exchange—But US Residents Are Barred

While Su Zhu, a co-founder of bankrupt crypto hedge fund Three Arrows Capital (3AC), announced Thursday that a waitlist is live for Open Exchange (OPNX), the new exchange may not be as open as its name implies. The newly announced venture caters to those who’d like to trade bankruptcy claims—in cases from FTX to Blockfi—but stipulates on its homepage that people in 23 different regions are barred from signing up. Those countries include sanctioned nations such as North Korea, Cuba, and Venezuela...

The 3AC bankruptcy also contributed to the broader crypto contagion that was set off last year with the collapse of the Terra ecosystem—in which 3AC claimed to have personally lost money as well.

Given that another co-founder of OPNX is Mark Lamb, the CEO of another troubled crypto derivatives exchange, CoinFLEX, news of the launch of 3AC Ventures was greeted with some skepticism on social media.

“Same logo, same people. Same name. While running away from creditors. The audacity is transdimensional in magnitude,” commented one user on Twitter.

"Understandable" skepticism

Still, some industry players believe there’s a possibility of the new venture eventually delivering results.

"Given the past issues of 3AC including the bankruptcy, primarily related to leveraged trades going wrong and leading to substantial financial loss, the skepticism around trust is understandable,” Yusuf Sevim, CEO and founder at blockchain platform MetaTime, told Decrypt. “However, the stated aim of 3AC Ventures to focus on superior risk-adjusted returns without leverage suggests a shift in strategy that might assuage some concerns.”

Sevim also pointed to the success of the OPNX exchange, which has managed to achieve substantial daily trading volumes, while its native token OX soared 39% over the week.

According to him, this “indicates a potential for recovery and redemption” for the 3AC co-founder. “Trust, in this case, may be regained through transparency, the delivery of promised results, and evidence of responsible management to avoid past mistakes,” said Sevim.

“In the face of today's market adversities, we stand resolute in our conviction that the true market transformers are the 'oxen'—those relentless innovators and builders who work regardless of conditions. The commitment at 3AC Ventures is to support these individuals as they drive long term crypto adoption,” Davies told Decrypt.