CoinFLEX tries to mitigate backlash over proposed new 3AC project

Amid mounting criticism on social media, cryptocurrency investment firm CoinFLEX has sought to clarify its plans to build a new cryptocurrency exchange with Three Arrows Capital (3AC).

A leaked pitch deck on Jan. 16 revealed that it was collaborating with the now-bankrupt hedge fund to build a proposed crypto exchange called “GTX,” which would focus on trading claims against bankrupt companies.

In a blog post published shortly thereafter, CoinFLEX went on to “clarify misconceptions about leaked materials related to the proposed ‘GTX’ exchange.”

First off, CoinFLEX said that it won’t actually be using the name “GTX” as detailed on the launchpad, noting that it only serves as a placeholder name for now.

Some members of the community had pointed out its similarities to the name of the recently collapsed “FTX” crypto exchange that was previously run by founder Sam Bankman-Fried.

CoinFLEX added that it would look to change its name to the new entity, noting that CoinFLEX CEO Mark Lamb and co-founder Sudhu Arumugam will remain involved in the new entity.

Second, the firm also attempted to address criticism of the company, arguing that building the new exchange would be valuable to both rights holders and Coinflex creditors.

CoinFLEX said that the funds raised would be used for operational growth, increasing its capital value to CoinFLEX creditors and shareholders.

“This avenue will not only be an opportunity to serve a large number of existing crypto creditors, but by doing so, it will also bring new volumes to the exchange through crypto trading.”

“Above all, we are committed to ensuring that any decisions and actions taken by CoinFLEX are in the best interest of CoinFLEX’s creditors,” he added.

The firm was also considering adding other asset classes to the proposed new entity’s offerings, such as stocks and bonds.

“Various avenues are being considered to build regulated venues/exchanges for these assets. In recent months, we have made significant progress in discussions with regulators and partners in highly regarded jurisdictions,” he said.

CoinFLEX also clarified that the decision whether or not to create the new exchange will be made by “the reconstituted board” of the company.

This would include platform depositors, SmartBCH or SmartBCH alliance holders, Series B holders, and an independent director to be elected by platform depositors with the consent of Series B holders.

He noted that management will abstain from voting on this proposal.

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Some saw CoinFLEX’s plans to start a new crypto exchange with 3AC as controversial because 3AC was itself a company that went bankrupt while the whereabouts of its founders are still unknown.

In a Twitter post on Jan. 16, Ripple’s former engineering director Nik Bougalis criticized the newly proposed company, calling it a “scam” due to the involvement of 3AC founders Su Zhu and Kyle Davies.

So @zhusu and Kyle Davies are trying to steal more money! On one hand, I can’t say I’m surprised: scammers are going to scam.

But on the other hand, this is so crazy that there is no word to describe it. The arrogance and arrogance of these idiots really knows no bounds. https://t.co/h2jpiKPmCr

— (@nbougalis) January 16, 2023

Meanwhile, the CEO of crypto exchange creator Wintermute stated that his company will “cancel out” anyone who invests in the new exchange.

And since we’re talking about canceling things, if you’re investing in the coinflex/3ac “exchange”, you might find it a bit more difficult to work with wintermute in the future (on the relationship building side).

— cynical eager (@EvgenyGaevoy) January 16, 2023