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The co-founders of bankrupt cryptocurrency hedge fund Three Arrow Capital, Su Zhu and Kyle Davis, are facing new challenges for operating and promoting their new digital asset exchange OPNX without the required local license in Dubai.
The Dubai Virtual Assets Regulatory Authority (VARA) sent a written notice to Zhu and Davis, along with two other OPNX executives, according to a report published in Bloomberg. The digital asset regulator, in a statement to Bloomberg, said they were still investigating the newly formed exchange and reportedly assured that corrective action would be taken against the firm for violating laws.
The regulator reportedly said that OPNX is marketing the exchange in the country through social media platforms without placing guaranteed restrictions on residents of Dubai/UAE. VARA first discovered the exchange in February through its marketing ads to attract customers even before the exchange was launched.
The latest written reprimand from VARA came after two cease-and-desist notices from authorities in February and March. VARA said that despite notifications, they have received no response from OPNX and issued a “warning to investors and the market” regarding the exchange just days after its April 4 launch.
The launch of OPNX and its connection to the former founders of a failed cryptocurrency hedge fund has always been a topic of discussion in the cryptocurrency industry. The crypto community has been baffled to see Zhu and Davis promoting and raising funds for the new venture, although they are currently under investigation for the collapse of 3AC.
Sudhu Arumugam of @OPNX_Official on the Role of Regulation in Maximizing the Benefits of Web3 and Digital Assets pic.twitter.com/Z75DOBQTv0
— 朱溯 (@zhusu) February 16, 2023
Zhu and Davis reportedly declined any further ties to OPNX and reportedly told Bloomberg that “while Kyle and I helped contribute initial ideas for OPNX, Leslie is pretty much the CEO and we’re not involved in the day-to-day work. “.
Related: OPNX jokes about its early dismal volume after reporting 90,000% growth
OPNX’s association with former 3AC founders hasn’t helped the company when it comes to fundraising. On April 24, OPNX head Leslie Lamb blasted a number of venture capital firms on Twitter after some of them reportedly pulled out of the venture. The exchange has previously said it is backed by companies such as AppWorks, Susquehanna (SIG), DRW, MIAX Group, China Merchant Bank International, and Token Bay Capital.