Su Zhu and Kyle Davies, who ran collapsed crypto hedge fund Three Arrows Capital, are among the founders of Open Exchange, which wants to let its customers trade bankruptcy claims on failed crypto companies, including Celsius, FTX and even Three Arrows itself. But the fledgling venture, which went live in April, has been hit with numerous problems since it launched, the Wall Street Journal reported. Open Exchange, also known as OPNX, has been reprimanded by a financial regulator, threatened with legal action by institutions it said were its investors and rejected by some market makers. At the root of some of these problems are the damaged reputations of Zhu and Davies, which haven’t recovered from the collapse of Three Arrows last year. The failure of Three Arrows cost its investors billions of dollars, fueled panic in crypto markets, worsened a slide in prices and led to direct losses for other firms. Crypto firms Voyager Digital and Genesis Global Trading both filed for bankruptcy in part because they had extended loans to the fund. Zhu and Davies created Open Exchange with Mark Lamb and Sudhu Arumugam, who previously ran CoinFLEX, a crypto platform that is now going through a restructuring after a single large investor didn’t meet a margin call. Open Exchange is acquiring CoinFLEX.
