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Three Arrows Capital Founders Launch Exchange Where You Can Trade 3AC Bankruptcy Claims (coindesk.com) 32

Zhu Su and Kyle Davies, the founders of failed crypto hedge fund Three Arrows Capital (3AC), have teamed with the co-founders of crypto exchange CoinFlex on the creation of Open Exchange, touting it as the "world's first public market place for crypto claims trading and derivatives." From a report: Noting a $20 billion market of claimants "desperately searching" for resolution to money lost at bankrupt crypto firms like Celsius, Genesis, BlockFi, Mt. Gox and 3AC, Open Exchange promises the ability to monetize claims by providing a marketplace for their trading.
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Three Arrows Capital Founders Launch Exchange Where You Can Trade 3AC Bankruptcy Claims

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  • by gosso920 ( 6330142 ) on Thursday February 09, 2023 @01:43PM (#63279367)
    of the 419 Nigerian Prince scam.
  • So (Score:4, Funny)

    by DarkRookie2 ( 5551422 ) on Thursday February 09, 2023 @01:47PM (#63279387)
    Its an NFT of the NFT you lost value on?
    • An NFT of a whole group of NFTs that were lost/stolen.

      At least in the case of Mt Gox, some of the missing bitcoin was sent to bogus addresses and the transactions were processed - there is no key to recover those coins and they are lost/locked essentially forever.

  • by awwshit ( 6214476 ) on Thursday February 09, 2023 @01:49PM (#63279403)

    Finance at its worst coming full circle. They really want people to buy into packages of crypto bankruptcy claims, expecting to make a future profit from the claims?

    They must really think people are dumb.

    • Comment removed based on user account deletion
    • They must really think people are dumb.

      That these people aren't already in jail makes me agree with your evaluation of them... and they're right!

    • It's the meme almost-bankrupt stock craze, but even dumber.
    • They must really think people are dumb.

      Well, after being proven right so many times, why wouldn't they?

    • by KlomDark ( 6370 )

      Hey man, my $100 Trillion Zimbabwe note is going to pay for my retirement, and a Lamborghini, you just watch! Any day now, I can just feel it!

    • Or just recoup as much of what they lost as possible.

      I thought this was completely ridiculous, but then something hit me. In a bankruptcy, there are rules as to the order in which claimants can be compensated, so you could look at this as a market for trading places in line. Which takes the concept from "completely ridiculous", to, "fairly ridiculous".

      • Seems really no different that the mortgage backed derivatives that blew up the market in 2008 (just on a smaller scale and with less potential market impact). You take a bunch of junk debt, package it together, and sell it off to speculators. Leveraged bets roll into this junk security and eventually the whole thing unwinds and everyone loses.
         

  • It's just scams all the way down.
  • Lol, how is the SEC going to let a failed company turn itself into a distressed debt marketplace selling its own junk bonds essentially? Crazy.

  • So, IRS, how does this work? Do we just need to report these two people or do we need to report all of their customers individually?

  • Insider Knowledge (Score:4, Informative)

    by Jason Earl ( 1894 ) on Thursday February 09, 2023 @02:02PM (#63279459) Homepage Journal

    The people running the exchange always have the advantage, especially if you have insider knowledge as to what claims are most likely going to be worth money in the end. The opportunities for shilling worthless claims and driving their value up and then trading these inflated claims for claims that will actually pay out in the end are basically endless. Not to mention the fact that the exchange will probably get transaction fees. Even if all of the claims end up being losers the exchange trading these worthless claims will still end up making actual money.

    You would probably be better taking your fiat currency, withdrawing it from the bank in the form of cash, and then feeding that cash into a wood chipper.

    • Yeah, it is kind of like a pet rock for us old folks.

      The concept is actually valid though; you create a market for the arbitrage of bad debt. Payout is likely comparable to roulette... if the market is not being front-run.

    • Heck, you could even make more money, by recording it and then uploading the video to YouTube. "Destroying my money, because I can." "Turning my money into confetti."
  • These individuals are actually selling us the rope we will be hanging them with.

  • Soon they will launch a platform for people claiming money from openexchange. Infinite money!
  • Except that you no chance in hell at ever recovering lost cryptocurrency, so anyone who buys is just straight up getting scammed. At least with traditional debt collection, some of the debtors can have their wages garnished if the debt is still within the statute of limitations and you win a default judgement, so there's at least a small possibility you'll make a return on purchasing bad debts.

    Seems like they're pretty much counting on suckers not realizing the futility of trying to recover lost crypto. T

  • .. or until someone stops them. I think there are plenty of examples of that recently. These are the potential fascist leaders of the future... until someone stops them.
  • A commodities market for used condoms.

  • -Start a business
    -Accept investor money
    -Go bankrupt
    -Manage trade of the bankruptcy claims against you
    -Profit!

  • Derivatives of worthless or impossible-to-value assets... I've seen this movie before, and the next evolution will be Synthetic NFTs to replace Synthetic CDOs. Crypto bankruptcy claims will packaged into tranches of worthless crap and given an AAA rating. Oh, and the rip on Farrow Tech is now $3, so get out there and SELL!
  • It's the entitled greed of finance chumps combined with the lack of regulation and chaos of crypto. This sounds like a great idea!

  • Sounds like it will be exchanges all the way down.

    Bankrupt exchange claims traded on a new exchange created by the same founders which goes bankrupt with the claims again traded on a new exchange created by the same founders which goes bankrupt with the claims .......

    You get the idea.

This is the theory that Jack built. This is the flaw that lay in the theory that Jack built. This is the palpable verbal haze that hid the flaw that lay in...

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