3AC Founders Zhu and Davies Propose to Raise $25M for New Crypto Exchange

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Su Zhu and Kyle Davies, the founders of collapsed crypto hedge fund Three Arrows Capital (3AC), are hoping to raise $25 million to launch a new crypto exchange called GTX, according to two separate presentations obtained by The Block.

News of the fundraising comes two months after exchange giant FTX implosed, leaving more than a million creditors out of pocket. The new exchange is taking advantage of the situation offering depositors the opportunity to transfer their claims from FTX to GTX and receive immediate credit in a token called USDG, the pitch deck said.

The exchanges name is even a spin on FTX, with one of the GTX pitch decks opening with the line “because G comes after F.”

The Three Arrows pair is teaming up with Mark Lamb and Sudhu Arumugam, who founded CoinFlex, a crypto exchange currently being restructured. The exchange leadership team is also made up of several CoinFlex executives, including the company’s general counsel and chief technology officer, for one of the bridges.

Bankruptcy of Celsius

GTX will leverage Coinflexs technology to build the exchange, and a legal team will oversee the onboarding of claims for all recent crypto bankruptcies such as Celsius and Voyager, according to the bridges.

Lamb declined to comment on fundraising efforts. Davies did not immediately respond to a request for comment.

The exchange is looking to launch as soon as possible, potentially as early as February, and estimates the claims market is worth around $20 billion, according to the bridges.

Three Arrows Capital was one of the biggest hedge funds in crypto until the collapse of the Terra ecosystem last year left it facing significant losses. Financial advisory firm Teneo handled the liquidation of 3AC’s assets and the hedge fund filed for Chapter 15 bankruptcy in New York.

In December, the court authorized the issuance of subpoenas to Zhu and Davies to turn over any “recorded information, including books, documents, records and papers” relating to the property or finances of Three Arrows Capital.

Zhu and Davies resurface

Both Zhu and Davies remained silent for a while after the hedge fund collapse, but have since resurfaced on social media lately. They are thought to be in Dubai and Bali respectively.

Disclaimer: As of 2021, Michael McCaffrey, the former CEO and majority owner of The Block, took out a series of loans from founder and former CEO of FTX and Alameda, Sam Bankman-Fried. McCaffrey resigned from the company in December 2022 after failing to disclose these transactions.

Update: Updated story to add more details on GTX’s plans.

2023 The Block Crypto, Inc. All rights reserved. This article is provided for informational purposes only. It is not offered or intended for use as legal, tax, investment, financial or other advice.

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