Seriously? The 3AC hedge fund bros are raising $25M for a new crypto exchange

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 Journal, Davies and Zhu believe the market for claims on bankrupt crypto companies—Celsius, Voyager, and FTX among them—is worth at least $20 billion.

Since bankruptcy proceedings typically take years to play out and eventual payouts are uncertain, many creditors choose to sell their claims to investors who hope to 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 Twitter, confidence in the pair is not high.

Respected crypto attorney Jake Cherinksy observed that, if you who 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, which turned out to be a giant Ponzi scheme.