Dubai’s VARA Reprimands Three Arrows Capital Founders’ OPNX Exchange

Lavina Daryanani
Source: Blockchain News

Su Zhu and Kyle Davies, the founders of defunct crypto hedge fund Three Arrows Captial, recently teamed with the founders of CoinFLEX to create Open Exchange or OPNX. They branded the exchange to be the first of its kind that allowed users to trade claims of bankrupt crypto companies like FTX. According to the latest development, Dubai authorities have reprimanded Zhu and Davies for operating and promoting the exchange without the requisite regulatory license.

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The Virtual Assets Regulatory Authority [VARA] recently handed a written reprimand to the former Three Arrows Capital and the other two co-founders and chief executive of OPNX. VARA said that it will continue investigating and delving into OPNX’s activity “to assess further corrective measures that may be required.”

It’s known that the UAE and other regions like Hong Kong are looking to tap into the crypto sector and emerge as foundation cities. Even so, regulations and compliance requirements have not taken a back seat. Dubai, for instance, released a ten-part rule book recently. The same chalked out various digital asset rules related to licensing, marketing, and AML obligations.

The authority specifically asserted that only companies that are licensed by the VARA can describe themselves as virtual asset businesses. The latest OPNX-related development infers that regulators are not cutting any slack for crypto companies.

Zhu and Davies were based in Singapore beforehand. However, they established Dubai as one of their main bases since the Three Arrows Capital Saga unfurled last year. They’ve been tussling with liquidators lately, in an attempt to recover funds for creditors. Mark Lamb, Sudhu Arumugam, and Leslie Lamb have also been reprimanded by VARA.

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Is OPNX at fault?

Leslie Lamb has claimed that the exchange has not done any marketing targeting Dubai or the wider UAE. Lamb told Bloomberg told that OPNX is cooperating with VARA’s investigation and doesn’t believe it violated any rules. She said,

“At no point in time have UAE customers been able to open an account on OPNX.”

Zhu, on the other hand, clarified,

“While Kyle and I helped contribute the initial ideas for OPNX, Leslie is very much the CEO, and we aren’t involved in the day-to-day.”

In its statement, the VARA said that it issued a cease and desist order to the company and its founders on Feb. 27. That was followed by a second notice on March 10. Nevertheless, OPNX launched on April 4. After a few days, the regulator issued an “Investor and Marketplace Alert” pertaining to OPNX. The regulator claimed,

“Through social media platforms, OPNX had been engaged in marketing the exchange without establishing warranted restrictions for residents of Dubai/UAE.”

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