3AC

OPNX token spikes 50% after Su Zhu unexpectedly posts a 'gm' on Twitter

The OX token hit a price high not seen since co-founder Su Zhu was arrested in late September.

Open Exchange Token (OX), the native token of the crypto bankruptcy claims platform OPNX, spiked 50% just 20 minutes after co-founder Su Zhu supposedly posted to X (Twitter) for the first time since his arrest.

On Dec. 29, the same day he was arrested at Singapore’s Changi Airport attempting to leave the country.

In the 20 minutes after Su’s X post, OX jumped nearly 50% to $0.021 and hit a 63-day high — a price not seen since the day of Su’s Sept. 29 arrest, according to CoinGecko data.

OX token price with a spike in the minutes after Su’s X post. Source: CoinGecko

Shortly after the price peak, OX retraced by around 6%.

Su was arrested on Sept.

The order was meant to see Su serve four months’ imprisonment — meaning he wouldn’t be released until next year, though some have speculated he may have been released after a wallet labeled “suzhu.eth” — believed to belong to Su (though unconfirmed) — became active again on Nov.

OPNX, short for Open Exchange, is a platform allowing for the trade of creditor claims from bankrupt crypto companies.

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3AC co-founder can answer subpoena or ‘take his chances’ — US judge

The U.S. judge presiding over the Three Arrows Capital bankruptcy case has upped the pressure on Kyle Davies to comply with a January-issued subpoena.

Kyle Davies, the co-founder of bankrupt crypto hedge fund Three Arrows Capital, has been ordered to answer the subpoena issued to him in January or risk being held in contempt of court.

The Jan. 5 subpoena was issued to Davies via Twitter following approval from a New York bankruptcy court, instructing him to provide 3AC’s liquidators with documents such as seed phrases and private keys as well as company communications and other company-related documents within 14 days.

After failing to hear from Davies, the United States Bankruptcy Judge Martin Glenn granted a motion to compel on March 22, noting that Davies can appear and contest the arguments made by 3AC liquidators, “or he can fail to appear as he has done so far, and, frankly, take his chances.”

A motion to compel is a legal request that the court will compel one party to provide evidence to the party that brought the motion.

People found to be in contempt of court during civil proceedings are usually hit with a fine, but may also be imprisoned. The purpose of civil contempt is to coerce compliance, so the severity of punishments can increase until the order is carried out.

Related: Do Kwon faces fraud charges from US prosecutors hours after arrest

The current whereabouts of both Kyle Davies and fellow 3AC co-founder Su Zhu remains unknown.

Davies’s most recent tweet, on March 23, appears to show a photograph of him in Bali. However, an earlier tweet from the same day shows him standing with Su Zhu and one other person in Bahrain.

Su Zhu also shared a tweet with a recognizable landmark in the background on the same day, however, suggesting he may be or have recently been in Dubai.

According to lawyers for 3AC’s liquidators, Davies has “chosen to ignore his duties to Three Arrows.”

Meanwhile, the pair from 3AC has teamed up with CoinFLEX to launch OPNX, a marketplace aimed at enabling claims in crypto firm bankruptcy proceedings to be bought and sold. 

Magazine: Best and worst countries for crypto taxes — Plus crypto tax tips

DCG losses top $1B on the back of 3AC collapse in 2022

The crypto conglomerate reported that falling crypto prices and the fallout from Three Arrows Capital’s loan default to Genesis affected its results.

Cryptocurrency venture capital conglomerate Digital Currency Group (DCG) has reported losses of over $1 billion in 2022 due largely to the contagion relating to the collapse of the crypto hedge fund Three Arrows Capital (3AC).

DCG reportedly lost $1.1 billion last year, according to its Q4 2022 investor report,  and said the results “reflect the impact of the Three Arrows Capital default upon Genesis” along with the “negative impact” from falling crypto prices.

Genesis is the lending arm of DCG and the firm filed for Chapter 11 bankruptcy in late January. Genesis is 3AC’s largest creditor, as the company loaned the now-bankrupt hedge fund $2.36 billion. 3AC filed for bankruptcy in July 2022.

DCG’s fourth-quarter losses came to $24 million, while revenues came in at $143 million.

Full-year 2022 revenues for DCG came in at $719 million. The firm held total assets of $5.3 billion with cash and liquid holdings of $262 million and investments — such as shares in its Grayscale trusts — amounted to $670 million.

The remaining assets were held by divisions of its asset management subsidiary Grayscale and DCG’s Bitcoin (BTC) mining business Foundry Digital.

Its equity valuation came in at $2.2 billion with a price per share of $27.93, which the report said was “generally consistent with the sector’s 75%-85% decline in equity values over the same period.”

DCG declared on Nov. 1, 2021, that its valuation was more than $10 billion, following the sale of $700 million worth of shares to companies like Alphabet Inc., Google’s parent company.

Related: Genesis Capital’s fall might transform crypto lending — not bury it

However, the company said it “hit a milestone” with the restructuring of Genesis.

The agreement proposed earlier in February would see DCG contribute its equity share in Genesis’ trading entity and bring all Genesis entities under the same holding company and see its trading entity sold off.

DCG would also exchange an existing $1.1 billion promissory note due in 2032 for convertible preferred stock. Its existing 2023 term loans with an aggregate value of $526 million would also be refinanced and made payable to creditors.

A Genesis creditor said the plan “has a recovery rate of approximately $0.80 per dollar deposited, with a path to $1.00” for those owed money by the firm.

Voyager victim calls for trustee to seize control of the estate

The 120-page motion came from a creditor who asked for the appointment of a Chapter 11 trustee, citing alleged fraud and incompetence at Voyager.

A Voyager creditor and finance lawyer wants to see a Chapter 11 trustee appointed in crypto brokerage Voyager Digital’s bankruptcy trial, which would see Voyager lose control of its estate.

In a Feb. 1 motion, Voyager creditor Michelle DiVita accused Voyager of having a “history of financial statement inaccuracies and public misrepresentations that were known, or reasonably discoverable, at the beginning of the bankruptcy proceeding.“

Due to this pre-bankruptcy conduct, DiVita believes that an examiner or trustee should have been requested and is now doing so herself.

The filing alleges that Voyager “concealed the true nature of its lending activities by publishing financial reports that materially understated its loan positions by more than $1 billion.”

Shigo Lavine, a former director and chief investment officer for Voyager, highlighted some of the key accusations made in the filing in a lengthy Feb. 1 Twitter thread.

For example, Voyager allegedly underreported a loan to crypto hedge fund Three Arrows Capital by $609 million and undervalued Bitcoin (BTC) in its financial reports by 546% to downplay the size of its loans.

According to the filing, crypto exchange Coinbase also caught wind of Voyager’s “financial reporting inconsistencies” and had reportedly backed out of a potential deal to acquire the assets of Voyager after finding “the financials don’t add up.”

The bankruptcy proceedings already involve a United States rustee, who is required to bring a motion to appoint a Chapter 11 trustee when there are “reasonable grounds to suspect” that the debtor “participated in actual fraud, dishonesty or criminal conduct.”

While the U.S. trustee appoints a creditors committee and reviews applications for the recompensation of professionals amongst other duties, they may also hire a bankruptcy trustee to manage the debtor’s affairs if the debtors are not allowed to do so themselves.

Cointelegraph has contacted Voyager for a response to the allegations and the motion but did not receive an immediate response.

Related: Voyager tells court Binance acquisition plan is ‘sound business judgment,’ urgently needed

In other news, both Voyager and its creditors have pushed back at an attempt by bankrupt trading firm Alameda Research to claw back $446 million in loan repayments.

After commencing Chapter 11 proceedings on July 5, Voyager demanded the repayment of all its outstanding loans to Alameda which was repaid in full.

However, Alameda sought to recover the funds in a Jan. 30 court filing, arguing that because they repaid the loans within 90 days of filing for Chapter 11 bankruptcy, they could “claw back” these funds for the benefit of Alameda creditors.

Voyager says that its creditors have suffered “substantial harm” due to Alameda making a bid for Voyager’s assets that it could not honor, costing them over $100 million. Voyager argues that this makes Alameda’s claim subordinate to those of its other creditors.

‘Everything bubble’ bursts: Worst year for US stocks and bonds since 1932

While the crypto markets have taken a bashing in 2022, it hasn’t exactly been rosy for US stocks, bonds and real estate either.

It’s been a torrid year for investors, and not just those in crypto, with United States (U.S.) bonds experiencing their worst year in centuries and U.S. stocks pulling back nearly 20% since 2022 began.

As of Nov. 30, a Financial Times report noted that a traditional portfolio consisting of 60% stocks and 40% bonds will have seen its worst performance since 1932, when the U.S. was in the midst of the Great Depression.

Nominal return for US stocks and bonds from 1871-2022. Source: Financial Times.

Meanwhile, tech stocks, which some theorize have a correlation with cryptocurrency prices, haven’t had a great year either.

An index tracking the performance of U.S. companies in the industry recorded a loss of 35.76% for the year.

Household tech giants such as Netflix, Meta, Zoom, Spotify and Tesla have all had particularly difficult years as well with their share prices falling in the range of 51% and 70%, according to Yahoo Finance.

Even the “safe as houses” real estate sector has started to show signs of pain, with the most recent data from the Federal Housing Finance Agency showing that U.S. house prices were stagnant through September and October.

Return for an index tracking the stock performance of U.S. companies in the technology industry throughout 2022. Source: S&P Dow Jones Indices.

These stock and sector declines may help put the current crypto winter into better perspective, noting that total crypto market cap fell from $2.25 trillion to $798 billion throughout the year, representing a drop of 64.5%, and crypto billionaires recorded huge losses.

Some of the crypto crises that have occurred throughout 2022 include the bankruptcies of FTX, Celsius and Three Arrows Capital, as well as the collapse of the Terra network, among others.

Related: BTC price preserves $16.5K, but funding rates raise risk of new Bitcoin lows

According to a Dec. 30 tweet by investment analyst Andreas Steno, “every single asset class” is down significantly in 2022, and real estate is soon to follow.


Realized losses from FTX collapse peaked at $9B, far below earlier crises

Weekly-realized losses peaked at $20.5 billion when Terra Luna (LUNC) imploded and reached $33 billion when 3AC and Celsius collapsed, according to Chainalysis.

Blockchain analytics firm Chainalysis has attempted to put the FTX collapse into perspective — comparing peak weekly-realized losses in the wake of the exchange’s collapse compared to previous major crypto collapses in 2022.

The Dec. 14 report found the depegging of Terra USD (UST) in May saw weekly-realized losses peak at $20.5 billion, while the subsequent collapse of Three Arrows Capital and Celsius in June saw weekly-realized losses peak at $33 billion. 

In comparison, weekly realized losses during the FTX saga peaked at $9 billion in the week starting Nov. 7, and have been reducing weekly since. 

Chainalysis said the data suggests that by the time the FTX debacle took place in November, investors have already been hit with the “heaviest” crypto events this year.

“The data […] suggests that as of now, the heaviest hitting [crypto] events were already behind investors by the time the FTX debacle took place.”

The analytics firm calculated total realized losses by looking at personal wallets and measuring the value of assets as they were acquired and subtracting the value of these assets at the time they were sent elsewhere.

However, the data may still have overestimated realized losses, as it counted any movement from one wallet to another as a sale event. Chainalysis aalso noted that the chart doesn’t take other statistics into account, such as user funds stored on FTX’s exchange which are frozen.

“We can’t assume that any cryptocurrency sent from a given wallet is necessarily going to be liquidated, so think of these numbers as an upper bound for realized gains of a given wallet,” it explained.

Related: Was the fall of FTX really crypto’s ‘Lehman moment?’

While Chainalysis’ data covers realized losses, on-chain analytics platform CryptoQuant recently shared data on how net unrealized losses for Bitcoin (BTC) was impacted following the FTX collapse. 

It found that unrealized losses for BTC maxed at -31.7% following the FTX collapse compared to the collapse of 3AC/Celsius and Terra Luna, which only peaked at -19.4%.

Net unrealized profit/loss for Bitcoin. Source CryptoQuant.

Analytics data firm Glassnode also highlighted the high level of unrealized losses following the FTX collapse in a Nov. 17 tweet, comparing it to the peak of -36% seen during the 2018 bear market.

The gains or losses associated with an investment are considered unrealized up until the point that the investment is sold. The act of selling “realizes” these losses or gains. Unrealizes losses are also known as paper losses.

3AC subpoenas issued as dispute grows over claims of Terraform dump

The bankruptcy judge has given approvals to subpoenas aimed at Three Arrows Capital’s leadership, while a new Terra Luna conspiracy has been floated.

A federal judge overseeing Three Arrows Capital’s (3AC’s) bankruptcy proceedings has signed an order approving subpoenas to be delivered to 3AC’s former leadership, including co-founders Su Zhu and Kyle Davies.

The subpoenas require the founders to give up any “recorded information, including books, documents, records, and papers” in their custody that relates to the firm’s property or financial affairs.

The infamous hedge fund, worth $10 billion at its peak, filed for Chapter 15 bankruptcy on Jul. 1 with its troubles tied up in too much leverage and the collapse of Terra Luna (LUNA), known now as Terra Classic (LUNC), and its algorithmic stablecoin formerly known as TerraUSD (UST).

Since then, the liquidators — advisory firm Teneo — have been trying to hunt down the firm’s assets and pin down the 3AC’s co-founders.

The latest order allowing for the subpoenas will require recipients to give up any and all account information, seed phrases, and private keys for its digital and fiat assets, details about the securities and unregistered shares, and any accounts held on centralized or decentralized exchanges, along with any other tangible or intangible assets.

The order also labels hedge fund attorney Hannah Terhune, directors Mark Dubois and Cheuk Yao Pau, and Kelly Chen — wife of co-founder Kyle Davies — as “discovery targets”, alongside trading desk company Tai Ping Shan Limited, venture capital firm DeFiance Capital, 3AC-backed NFT fund Starry Night Capital and all of their associates.

Related: Legal team for 3AC liquidators blast founders for shifting blame to FTX, media blitz amid bankruptcy

Any individuals served with the subpoena are required to comply within 14 days unless otherwise agreed with the parties.

At the time of writing there has been no solid information on the whereabouts of either Zhu or Davies, it’s rumored Zhu is residing in Dubai while Davies is residing on the Indonesian island of Bali. Both have been active on social media commenting on developments relating to the collapse of FTX and Alameda research.

Claim: Terraform dumped $450M UST before crash

Meanwhile, self-proclaimed Terra whistleblower FatMan has made new claims on Twitter that it was the actions of Terraform Labs itself that led to the de-pegging of TerraUSD (UST), now TerraClassicUSD (USTC), in May — as opposed to a concerted attack.

That being said, not everyone is convinced about the theory or that the information is new.

In a Dec. 6 Twitter thread FatMan cited “bombshell data” from anonymous researcher Cycle_22 that purportedly discovered two trading wallets which are verified to be owned by Terraform Labs had “dumped” $450 million worth of UST on the open market in the three weeks leading up to the de-peg, explaining:

“TFL has been perpetrating the narrative that UST was ‘attacked.’ This is a false flag.”

“In reality, TFL themselves weakened the Curve pool by irresponsibly dumping a massive amount of UST in a short timeframe. This reduced liquidity and severely weakened the peg,” FatMan said.

However, some Twitter users responding to the thread have stated it was “public knowledge” that TFL was withdrawing UST from a Curve liquidity pool (3Pool) in preparation to seed its new stablecoin liquidity pool (4Pool) it was working with Frax Finance at the time.

Others, such as Twitter user RyanLion said it had been “clearly communicated” that the UST swaps into the curve pool were part of moves of swapping UST into other stables to purchase Bitcoin (BTC) for the Luna Foundation Guard reserves.

A June blog from blockchain firm Chainalysis said that while Terraform Labs withdrew millions of UST from 3Pool at the time (approximately 150 million), it was the actions of two traders in the hour following — swapping a total of 185 million UST for USDC and TFL’s response to that, which led to the depeg and resulting panic sell-off.

Three Arrow’s Su Zhu reveals latest attempts at a comeback post-FTX

The fall of FTX appears to have brought back certain crypto “villains” out from hiding, one even wants to start a new podcast series.

Three Arrows Capital co-founder Su Zhu looks like he may be attempting a comeback amid the fallout over FTX and Sam Bankman-Fried — seen by some as the crypto industry’s newest supervillain.

After months of radio silence, Su Zhu remerged on Twitter on Nov. 9, the day after FTX revealed it was suffering from a “liquidity crunch.”

As the FTX saga has unfolded, Zhu has continued to post on Twitter, offering sage advice through poetic metaphors, while tweeting veiled criticism of Sam Bankman-Fried and his handling of FTX.

In his latest Nov. 27 Twitter thread Zhu revealed his next steps — the launch of a “long-form video podcast series” that discusses “life, belief systems, and mental health,” which will be launched with a collaborator and friend named “Cliff.”

In the tweet, Zhu also makes reference to Allah, a sign some believe means he had converted to Islam.

Recently, Zhu also hinted at creating a new trading firm in a Nov. 22 interview with Bloomberg, saying it could be an “all-weather fund” — made to perform reasonably through all market conditions — that invests in traditional financial assets and crypto.

Zhu’s latest quasi-announcement has attracted more criticism than support, however, with many drawing a contrast between his actions at 3AC with the ideologies presented in Islam.

Blogger and nonfungible token (NFT) project founder Foobar asked “what does Allah say about interest-bearing loans?”

Another user pointed out that interest is “haram,” or forbidden under Islamic law.

Over the last few weeks, the community has noticed a return of so-called crypto villains to Twitter following the collapse of FTX.

Related: It’s time for crypto fans to stop supporting cults of personality

Another Three Arrows Capital co-founder, Kyle Davies, recently reappeared on Twitter after months of radio silence, posting on Nov. 13 on Twitter that he’d spent the last few months seemingly looking at grass and painting.

He even appeared on CNBC’s Squawk Box program on Nov. 16 to allege that Alameda “hunted” 3AC’s positions.

Alex Mashinsky, the founder of the bankrupt lending platform Celsius Network, has also made a reappearance after FTX’s downfall, appearing in a series of Twitter Spaces over the last few weeks.

In a Twitter Space on Nov. 27 Mashinsky said he “loves the idea” of getting FTX to “pay for the hole” and asked listeners to “make a lot of noise” and convince bankruptcy lawyers for Celsius and its Committee of Unsecured Creditors to sue FTX to pay for Celsius’ cash deficit.

It’s estimated that Mashinsky, Zhu and Davies owe creditors around $6.3 billion.

FTX ex-exec floats ‘cool token’ idea amid warning rebound may take years

Zane Tackett suggests alternatives to “boomer procedures” when it comes to FTX’s bankruptcy.

Bitcoin (BTC) and cryptocurrency may “take years to recover” from the FTX scandal, one industry analyst warns.

In a Twitter thread on Nov. 11, Filbfilb, co-founder of trading suite DecenTrader, said that the Terra debacle was itself still playing out.

Filbfilb: “I’ve never seen such a debacle”

The crypto industry is experiencing “a clear case of what goes up must come down,” Filbfilb summarized.

As the fallout from FTX and Alameda Research only begins to become apparent, many industry businesses and associated tokens have been left reduced to a shadow of their former selves.

Amid bankruptcy concerns from those with exposure to FTX and investigations from regulators, the outlook looks bleak for the industry’s reputation.

For Filbfilb, FTX–Alameda is itself a product of the implosion of Terra, Three Arrows Capital and others earlier this year.

“1) Most of this all links back to the first 3 AC / Celius meltdown,” he began.

He highlighted two other key causes:

“2) Businesses in the space compounded their aspirations based on supernormal, parabolic industry growth. 3) Cash is king; cash flows of many entities are down to the tune of 80%.”

The situation is in fact all too familiar; overly eager businesses create an ecosystem on steroids, which grows too quickly and takes on too much risk.

“Price, users, cashflow and compounded, cross-collateralized businesses using rapidly declining assets as balance sheet assets with future obligations works when price go up — its suicide when the tide goes out,” Filbfilb continued.

As such, for the cycle not to repeat itself, it may take “many years” of restructuring.

“So yes, im annoyed about the whole thing, ive never seen such a debacle, i understand why we are where we are but it is inexcusable by some of the people involved and they need to be held to account,” he concluded.

FTX ex-sales head shuns bankruptcy “boomer procedures”

Feelings are tense for countless investors and businesses with funds tied up in now-frozen FTX accounts.

Related: Hodlers in loss sit on 50% of BTC supply after $5.7K Bitcoin price dip

On Nov. 11, Zane Tackett, the exchange’s former head of international sales, confirmed rough liabilities totaled -$8.8 billion.

In a Twitter thread of his own, he quizzed users on whether FTX should create a “cool token” as a way of restructuring debt instead of filing for bankruptcy in the traditional manner, something he called “boomer procedures.”

“There’s no way to paint a pretty image out of these numbers, but when I saw the balance sheet this evening i thought it was going to be much worse,” he revealed.

“Now, granted, there’s a massive hole in liquid assets, there is a pretty big chunk of change in the ventures portfolio.”

Less than an hour after publication, the survey had accrued 3,100 responses, with 71% calling for token creation.

Twitter survey (screenshot). Source: Zane Tackett/Twitter

Such a move would be similar to that of fellow exchange Bitfinex, which, in 2016, released its UNUS SED LEO (LEO) token after it was hacked for $70 million in BTC.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Genesis Trading reveals $175M of funds are locked in FTX

Genesis Trading is the latest firm to declare exposure to FTX and may look to its parent company for help as it did after the 3AC bankruptcy.

In what it hails as an effort to be transparent, Digital Currency Group’s market maker and lending subsidiary, Genesis Trading, revealed that its derivatives business has around $175 million worth of funds locked away in an FTX trading account.

Genesis shared the news in a Nov. 10 tweet thread, in which the firm clarified that the locked funds would “not impact our market-making activities.”

Genesis also stated that they have no ongoing relationship with FTX or its sister company Alameda Research, the latter of which FTX CEO Sam Bankman-Fried has said is “also winding down trading.”

The denouncement of an ongoing relationship follows from other businesses within the crypto industry seeking to distance themselves from the FTX fallout, with Tether, Circle, Kraken and Coinbase all having declared that they are not exposed to the troubled firms.

While Genesis suggested in the Nov. 10 thread that its capital and positions in FTX would not prevent the “full functioning of our trading franchise,” it remains to be seen whether its parent company Digital Currency Group will be required to step in like it did after Genesis suffered from its exposure to Three Arrows Capital (3AC).

Related: Galaxy Digital discloses $77M exposure to FTX, $48M likely locked in withdrawals

Genesis claimed that it has “printed record volumes,” amid the FTX fallout after claiming on Nov. 9 that investors turn to them when market conditions are volatile to manage their risks.

However, its active loans had fallen 74.8% throughout the latest crypto winter, with its latest Q3 report showing that active loans outstanding totaled $2.8 billion, compared to $11.1 billion at the same time last year.