Like a phoenix rising from the ashes, GTX is making a comeback from the crypto graveyard. And this time, they have a moral mission to help those they wronged and all of those wronged by every failed crypto venture these past few years.
In a move that is stunning even the most brazen of crypto enthusiasts, the CEO of Three Arrows Capital is relaunching the former crypto fund as GTX. Or so they say, this is the placeholder name for the time being. Taking note of the failure of FTX, with the reasoning that ‘G’ comes after ‘F.’
But like the band Mystik Spiral, they might change the name. After a round of kicking on crypto Twitter, investment firm CoinFlex—which is partnering with the former 3AC founders Kyle Davies and Su Zhu, tried to quiet the controversy by saying GTX “is a placeholder name.” Let’s hope no one has engraved it on their guitar case or anything.
What’s the Main Pitch of GTX?
Part of GTX’s pitch is letting people buy and sell bankruptcy claims from failed crypto firms, as well as using those claims as collateral. The group’s looking to raise funds “ASAP” for a potential launch by the end of February, according to the pitch deck.
3AC certainly has experience with failed crypto companies. The hedge fund went belly-up last July after the crash of Luna and its sister coin, TerraUSD, and later defaulted on a $670 million loan provided by the now-bankrupt Voyager Digital. Zhu and Davies went into hiding after reportedly receiving threats in the midst of 3AC’s collapse, leaving behind a $150 million Much Wow yacht and a $30 million Singaporean mansion.
The co-founders estimate that there’s about $20 billion in the crypto claims market, noting that GTX “unlocks” funds from the embattled FTX and Celsius trading firms “for immediate trading.” Zhu tells The Wall Street Journal that 3AC creditors will “have the option to convert their claims into equity in the new claim-trading company.”
Will This New Venture Actually Work?
Well, it looks like the engineers and financial consultants over at 3AC might be onto something. The way the new program/company will function is fairly simple (or so they claim as of the time of writing).
Can 3AC really be trusted after everything that happened last year?
GTX’s plan is to tokenize these claims and create an exchange where these claims can be traded. These tokens can then be used as collateral for trading and bringing investors back into the market.
Instead of simply sitting back and waiting for the outcome of a lawsuit that may not give them their money back anyway, GTX will instead provide a market for clients to trade their claims as tokens and get their money back now. In exchange, GTX will take a small transaction fee of between 0.25 to 0.5 percent.
Potential Problems for GTX
A quick look at GTX’s pitch reveals some questionable assumptions by its founders. The first is that customers are likely looking to diversify exchange risk after the FTX crash and that the collapse of FTX has created a power vacuum that GTX will be able to fill.
The first part may well be true, but customers do need to find exchanges to hold their coins, and putting all their eggs in one basket is rarely the way to go in crypto.
The question is whether or not GTX can really capture such a large market. FTX left some big shoes to fill, and why all of FTX’s customers would go to GTX is something that GTX’s founders have yet to answer.