FTX logo with crypto coins, $100 bill are shown for illustration. FTX has filed for bankruptcy in the US, seeking legal protection as it seeks a way to refund users.
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The co-founders of a now-defunct cryptocurrency hedge fund are pitching investors to a new trading market aimed at capitalizing on the growing volume of digital currency-related bankruptcies.
Kyle Davis and Su Zhu are listed under the slides of the founding members acquired by CNBC for the troubled debt market called GTX. Davies and Zhu founded Three Arrows Capital, a Singapore-based cryptocurrency hedge fund that was wound up by a court in the British Virgin Islands.
The deck noted that Three Arrows Capital “collapsed in 2022.” In the past, it was considered one of the most popular crypto hedge funds, once managing around $10 billion in assets.
Followers of technology and financial exchanges are increasingly interested in how bankruptcies and frauds in the crypto space will be handled after the collapse of FTX. Davies and Zhu are part of a group arguing that the so-called crypto “claims” market should have a public market, given the bankruptcies affecting holders of digital currencies.
It aims to appeal to the more than one million FTX depositors now involved in bankruptcy proceedings, the slide said. Many of those FTX clients are selling claims for about a tenth of their value for immediate liquidity as they try to avoid what could be years of waiting to settle, according to the deck.
They cited a “clear need to unlock” the claims market, which they estimate at $20 billion and believe GTX could “dominate” within two or three months. GTX said in a statement that once scaled, the platform could fill “the power vacuum left by FTX” in crypto trading and move into the securities lending market.
GTX is raising $25 million for the platform, aiming to hit the market by the end of February at the latest, according to Deck.
Mark Lamb and Sudhu Arumugam, co-founders of crypto trading platform CoinFLEX, are listed as founding members alongside Davies and Zhu. 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 board lists Kent Deng as GTX’s CTO, Leslie Lamb as CMO and Evelina Mielecka as Chief Digital Officer. GTX has a team of over 60 developers, according to the deck.
— CNBC’s MacKenzie Sigalos contributed to the report
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