The founders of the defunct hedge fund Three Arrows Capital (3AC) are facing scrutiny from Dubai's crypto regulator regarding their latest venture, the Open Exchange (OPNX). Co-founders Kyle Davies and Su Zhu are among five people who received a written warning from Dubai's Virtual Assets Regulatory Authority (VARA) for operating an unlicensed virtual asset exchange service.
Launched last month, OPNX offers spot and futures trading and plans to enable trading of bankruptcy claims for insolvent platforms like FTX and Celsius. However, the exchange has not secured necessary regulatory licenses, according to a VARA statement.
VARA had previously issued a Cease and Desist order in February, leading to some restrictions being applied to Dubai and UAE residents. However, the restrictions were not comprehensively applied across all communication channels, resulting in a second Cease and Desist notice in March. OPNX launched its exchange on April 4th, prompting VARA to issue an Investor and Marketplace Alert before sending a written reprimand on April 18th.
The reprimand also addressed Mark Lamb and Sudhu Arumugam, co-founders of the business, and OPNX CEO Leslie Lamb. The regulator is actively monitoring the situation and investigating OPNX's activities to assess potential corrective measures required to protect the market.
OPNX is a joint venture between 3AC's founders and the founders of derivatives exchange CoinFLEX, which is currently undergoing restructuring. The platform uses CoinFLEX's native token FLEX and its CEO, Leslie Lamb, is also CoinFLEX's chief marketing officer.
The OPNX founders' previous experiences with 3AC, which collapsed last summer after sustaining heavy losses, are highlighted in the "about us" section of the exchange's website. The founders emphasize the importance of learning from setbacks and using their wisdom to build a more robust, open, and transparent financial world for everyone.