The co-founders of failed cryptocurrency hedge fund Three Arrows Capital (3AC), Su Zhu and Kyle Davies, have been in trouble again for operating and promoting their new digital asset platform, Open Exchange or OPNX, without the necessary local license in Dubai. .
According to a report published in Bloomberg, the Dubai Virtual Assets Regulatory Authority (VARA) sent a written notification to Zhu and Davies along with two other OPNX executives. In a statement to Bloomberg, the VARA said that it continues to investigate the exchange’s activities and assured that corrective action would be taken against the company for violating the laws.
The regulator allegedly alleged that OPNX had engaged in promoting the exchange in the country through social media platforms without placing justified restrictions on residents of Dubai and the United Arab Emirates. The VARA first discovered the exchange in February through its marketing announcements to attract customers even before its launch.
VARA’s latest written rebuke comes on the heels of two cease and desist notices from authorities in February and March. VARA stated that despite the warnings, it got no response from OPNX and issued an “investor and market alert” against the exchange just days after its launch on April 4.
The launch of OPNX and its association with the former founders of 3AC has caused a lot of buzz in the cryptocurrency sector. The cryptocurrency community was taken aback to see Zhu and Davies promoting and raising funds for a new company, even though they are under investigation for the 3AC crash.
Sudhu Arumugam of @OPNX_Official on the Role of Regulation in Maximizing the Benefits of Web3 and Digital Assets pic.twitter.com/Z75DOBQTv0
— æ±æº¯ (@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’re not involved in the day a day”.
OPNX’s association with the former 3AC founders has not helped their fundraising efforts. On April 24, Leslie Lamb, CEO of OPNX, lashed out on Twitter against several venture capital firms after some withdrew their support for the company. The exchange had previously claimed that it was backed by companies including AppWorks, Susquehanna International Group, DRW Venture Capital, MIAX Group, China Merchants Bank International, and Token Bay Capital.
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