A major crypto market maker is already distancing itself from new venture 3AC

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Wintermute, the big crypto market maker, was quick to distance itself from a new fundraising round by the co-founders of bankrupt hedge fund Three Arrows Capital (3AC), echoing similar sentiments from the part of the community.

Three Arrows Capital co-founders Su Zhu and Kyle Davies have teamed up with Mark Lamb and Sudhu Arumugam, co-founders of crypto exchange CoinFlex – which is going through a restructuring process – to raise $25 million for a new exchange called GTX, according to a pitch deck seen by CoinDesk.

GTX said it plans to create an exchange where users can trade cryptos, stocks and claims on bankrupt companies like FTX. The founders see a “clear market need” to unlock $20 billion in crypto claims, which GTX said it could “dominate” within 2-3 months, according to the presentation.

However, the crypto community was quick to voice its skepticism, with the CEO of Wintermute being one of the most prominent voices. “If you’re investing in a coinflex/3ac ‘exchange’, you might find it a bit harder to work with Wintermute in the future (on the relationship-building side),” the tenor’s CEO said on Monday. market, Evgeny Gaevoy, in a tweet.

He also clarified that his company would not invest in any projects, including the co-founders of 3AC. “Likewise, we’re not going to be in VC rounds where these guys are about to enter the cap table, so founders beware,” Gaevoy noted in another tweet.

A crypto market maker is basically a trading firm that uses its own capital to place bets on tokens and take the other side of trades on exchanges when other players try to get in or out quickly. A large market maker, such as Wintermute, which trades over $5 billion a day, distancing itself from GTX is likely to resonate with potential backers against investing in the new venture.

Read more: Crypto trading firm Wintermute receives a seat on FTX’s key creditors’ committee

The story continues

The Singapore-based crypto hedge fund went bankrupt in 2022, after being unable to repay its creditors due to a wave of unscheduled liquidations, the , known as 3AC, filed for bankruptcy in July. At the time, 3AC was $3.5 billion in debt.

The hedge fund co-founders remained silent for months after the liquidation began, but resurfaced in the public eye after crypto exchange FTX filed for bankruptcy in November.

The new company aims to “lead global progress toward greater financial transparency, liquidity and certainty” by initially soliciting plaintiffs in bankruptcies that have rocked crypto to trade their claims on GTX. These bankruptcies include BlockFi, which had lent money to 3AC and which itself later went bankrupt, Celsius and FTX, according to the pitch deck.

The presentation does not specify whether users will also be able to exchange 3AC claims. However, the Wall Street Journal reported, citing Zhu, that some 3AC creditors would have the option of converting their debts into shares in the new debt trading company.

GTX plans to charge 0.25% to 0.50% in fees and estimates the time-to-market as “As soon as possible by the end of February”. Once the debt exchange gets people hooked, GTX said it will “fill the power vacuum left by FTX” by allowing its users to trade crypto, and eventually stocks, the pitch said. deck.

The cynicism about the new venture reverberated throughout the crypto community, including Nic Carter, a partner at Castle Island Ventures, a public blockchain-focused venture capital fund. “Disgraced scammers are teaming up with other disgraced scammers to swap claims from a collapsed scam exchange. Seems sustainable,” Carter said in a tweet.

None of the founders were available to comment on the pitch deck, at the time of publication.

Read more: They burned the crypto. Now they want a comeback

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