Founder of bankrupt 3AC seeks to raise funds for crypto project ‘GTX’

Are you a high risk investor looking to bet on fugitives with a high profile bankruptcy under their belt? Well, a proposed new crypto exchange named GTX might be the thing for you.

The Block reported on Monday that Su Zhu and Kyle Davies, who founded crypto hedge fund Three Arrows Capital (3AC), are circulating a slide deck to potential investors that describes a new exchange that would let creditors buy and sell claims on bankrupt crypto companies—including 3AC.

Davis and Zhu are under multiple criminal and regulatory investigations pertaining to 3AC, which collapsed last June after making a major bet on a fraudulent stablecoin project called Terra. The 3AC founders, who are believed to be hiding out in Dubai and Bali, became the subject of a New York magazine profile that mocked their investing ineptitude and lavish personal lifestyles.

According to the slide deck, which was also viewed by the Wall Street JournalDavies and Zhu believe the market for claims on bankrupt crypto companies—which also include names like Celsius, Voyager and FTX—is worth at least $20 billion.

Since bankruptcy proceedings typically take years to play out and the eventual payout is uncertain, many creditors choose to sell their claims to investors who hope for cash in on them later.

In this light, if Zhu and Davies’ estimate of a $20 billion in crypto claims is even roughly accurate, the proposed business could make sense. But part of that will entail finding investors to back their project and, based on reactions on Twitterconfidence in the pair is not high.

Respected crypto attorney Jake Cherinksy observed that, if you invest in transnational fugitives, “you deserve to lose every dollar you have.”

Meanwhile, the name of the proposed crypto bankruptcy exchange doesn’t inspire confidence. “GTX” appears to be a riff on FTX—the exchange that turned out to be a giant Ponzi scheme.

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