The FTX logo with crypto coins with a 100 dollar bill is shown for illustration. FTX has filed for bankruptcy in the United States, seeking court protection as it seeks a way to return money to users.
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The co-founders of a now liquidated cryptocurrency hedge fund are courting investors for a new trading market that aims to capitalize on a growing volume of digital currency-related bankruptcies.
Kyle Davies and Su Zhu are listed under the founding members slide of a pitch deck obtained by CNBC for a struggling debt market called GTX. Davies and Zhu founded Three Arrows Capital, a Singapore-based cryptocurrency hedge fund that was ordered to liquidate by a court in the British Virgin Islands.
Tech and financial exchange enthusiasts are increasingly interested in how bankruptcies and fraud in the crypto space will be handled after the collapse of FTX. Davies and Zhu are part of a group arguing that the so-called crypto “claims” market, in reference to bankruptcies affecting holders of digital currencies, should have a public market.
It aims to attract the more than one million FTX depositors who are now embroiled in bankruptcy proceedings, according to a slide in the pitch deck. Many of these FTX clients are selling receivables at around a tenth of their value for immediate liquidity as they try to avoid what could be a years-long wait for repayment, according to the bridge.
They cited a “clear need to unlock” the claims market – a market they estimate at $20 billion and believe GTX could “dominate” within two or three months. GTX said in its pitch that once scaled, the platform could fill a “power vacuum left by FTX” in crypto trading and enter the securities lending market.
GTX is raising a $25 million seed for the platform, aiming to hit the market by the end of February at the latest, according to the deck.
Mark Lamb and Sudhu Arumugam, co-founders of crypto trading platform CoinFLEX, are listed alongside Davies and Zhu as founding members. Representatives for CoinFLEX and Three Arrows Capital did not immediately respond to CNBC’s request for comment.
Along with the four founding members, the deck lists Kent Deng as CTO of GTX, Leslie Lamb as CMO, and Ewelina Mielecka as Chief Digital Officer. GTX has a team of over 60 developers, depending on the deck.
– CNBC’s MacKenzie Sigalos contributed reporting