Home Finance News Founders of Collapsed Crypto Hedge Fund Pledge to Donate Earnings from New Venture to Creditors

Founders of Collapsed Crypto Hedge Fund Pledge to Donate Earnings from New Venture to Creditors

In a show of goodwill, the co-founders of the now-collapsed crypto hedge fund Three Arrows Capital (3AC) have pledged to donate a portion of their earnings from a new crypto venture to the creditors who experienced losses during the fund’s collapse in 2022. This initiative, described as a “shadow recovery process,” aims to provide an alternative means for creditors to recoup their losses. However, controversy surrounds the co-founders’ new venture, Open Exchange (OPNX), as some question their commitment to addressing the fallout from the collapse of 3AC.

The Pledge to Donate Earnings

During a Twitter Space session on July 3, Kyle Davies, co-founder of 3AC, expressed his belief in the importance of donating potential earnings from OPNX to the creditors of 3AC. He described it as a positive gesture and a separate initiative from the ongoing official liquidation process managed by consulting firm Teneo. Davies and his co-founder, Su, intend to donate funds only to early supporters of OPNX. He emphasized that participation in this alternative process is voluntary, and creditors who choose not to participate are not obligated to do so.

Davies stated that several creditors have already been reimbursed in full, and this new initiative aims to provide additional relief to those affected. He framed the plan as a unique and unprecedented approach to pay back creditors and create a positive outcome.

The Controversy Surrounding OPNX

The launch of OPNX on April 4 generated controversy within the crypto community. Critics argued that Davies and Su were embarking on a new venture while seemingly evading their responsibilities regarding the collapse of their hedge fund. On July 1, 2022, Three Arrows Capital filed for Chapter 15 bankruptcy protection, revealing a debt of over $2.8 billion to more than 20 firms.

The whereabouts of the co-founders have remained uncertain, with liquidators serving them subpoenas via Twitter on January 5 due to difficulties in locating them. Reports indicate that Davies and Su have spent time surfing in Bali.

Liquidators’ Efforts and Creditors’ Perspective

Liquidators have recently announced their intention to recover $1.3 billion in lost funds from the co-founders of 3AC. The pledge by Davies and Su to donate earnings from OPNX could potentially be seen as an attempt to address their obligations to creditors.

From the creditors’ perspective, the offer of a “shadow recovery process” may provide some hope of recouping their losses. However, skepticism remains, given the co-founders’ history and the controversies surrounding the collapse of 3AC. Creditors may approach the situation cautiously, weighing the potential benefits of participating in this alternative process against the uncertainty surrounding the co-founders’ intentions and the overall viability of OPNX.

Conclusion

In conclusion, the pledge by the co-founders of Three Arrows Capital to donate a portion of their earnings from their new venture, Open Exchange (OPNX), to the creditors represents a gesture of goodwill and an alternative means of addressing the fallout from the collapse of the hedge fund. While some creditors may view this initiative as an opportunity to recoup their losses, skepticism and controversy continue to surround the co-founders and their new venture.

The collapse of Three Arrows Capital and the subsequent bankruptcy filing raised questions about the co-founders’ accountability and their commitment to addressing the financial losses suffered by creditors. The launch of OPNX while the liquidation process was underway further intensified the scrutiny and criticism from the crypto community. Some argue that embarking on a new venture might imply a disregard for the obligations owed to creditors.

The co-founders’ pledge to donate earnings from OPNX should be viewed with caution, considering their previous track record and the uncertainties surrounding the new venture. Creditors must carefully evaluate the potential benefits and risks associated with participating in this “shadow recovery process.” While the offer may provide a glimmer of hope, it remains essential for creditors to maintain a realistic perspective and seek clarity on how the pledged funds will be distributed and managed.

The resolution of this matter will have implications beyond the affected creditors. It will shape perceptions about accountability and responsibility in the crypto industry, where trust and transparency are critical. The outcome of the co-founders’ initiative and the fate of OPNX will serve as a litmus test for the community’s ability to hold individuals and projects accountable.

In the evolving landscape of digital currencies, it is crucial for stakeholders to rely on trusted sources, exercise due diligence, and demand transparency from market participants. The episode involving Three Arrows Capital highlights the need for robust regulatory frameworks and mechanisms to protect investors and ensure the integrity of the market.

Ultimately, the true impact of the co-founders’ pledge and the success of OPNX will depend on the actions they take and the outcomes they deliver. The crypto community, regulators, and affected creditors will closely observe the progress, holding the co-founders accountable for their commitments. Only through genuine efforts to rectify past shortcomings and transparent actions can the co-founders regain trust and contribute to the establishment of a more resilient and responsible digital currency ecosystem.

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Julie J

Julie is a renowned crypto journalist with a passion for uncovering the latest trends in blockchain and cryptocurrency. With over a decade of experience, she has become a trusted voice in the industry, providing insightful analysis and in-depth reporting on groundbreaking developments. Julie's work has been featured in leading publications, solidifying her reputation as a leading expert in the field.

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