The co-founders of failed crypto hedge fund Three Arrows Capital (3AC) — Su Zhu and Kyle Davies — have run into fresh trouble over operating and promoting their new digital-asset platform, Open Exchange or OPNX, without the required local license in Dubai.
According to a report published in Bloomberg, Dubai’s Virtual Assets Regulatory Authority (VARA) sent a written notice to Zhu and Davies along with two other OPNX executives. In a statement to Bloomberg, VARA said it is still investigating the exchange’s activities and reportedly assured corrective measures would be taken against the firm for violating laws.
The regulator reportedly claimed that OPNX had been engaged in marketing the exchange in the country through social media platforms without establishing warranted restrictions for residents of Dubai and the United Arab Emirates. VARA first discovered the exchange in February through its marketing advertisements to lure customers even before it launched.
The latest written reprimand from VARA comes after two cease-and-desist notices from the authorities in February and March. VARA said that despite the notices, they didn’t hear back from OPNX and issued an “investor and marketplace alert” against the exchange just days after its launch on April 4.
OPNX’s launch and its association with the former founders of 3AC has been a talking point in the crypto industry. The crypto community was baffled to see Zhu and Davies promoting and raising funds for a new venture, even though they are under investigation for the downfall 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 Davies have distanced themselves from any further association with OPNX, reportedly telling Bloomberg that “while Kyle and I helped contribute the initial ideas for OPNX, Leslie is very much the CEO and we aren’t involved in the day-to-day.”
OPNX’s association with the former 3AC founders has not helped its fundraising efforts. On April 24, OPNX CEO Leslie Lamb blasted several venture capital firms on Twitter after some reportedly backed out of the venture. The exchange earlier claimed that it was backed by the likes of AppWorks, Susquehanna International Group, DRW Venture Capital, MIAX Group, China Merchants Bank International and Token Bay Capital.