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Amid mounting criticism on social media, crypto investment firm CoinFLEX has attempted to clarify its plans to build a new cryptocurrency exchange with Three Arrows Capital (3AC).
A pitch deck leaked on Jan. 16 revealed that it is working with a bankrupt hedge fund to build a proposed crypto exchange called “GTX.” It focuses on trading claims against insolvent companies.
In a blog post published shortly after, CoinFLEX went on to “clarify misconceptions about leaked material regarding the proposed ‘GTX’ exchange.”
First, CoinFLEX stated that it would not actually use the name “GTX” as it appears on the pitch deck, noting that it is only acting as a temporary name at this time.
Some community members have noted similarities to the name of the recently defunct cryptocurrency exchange FTX, previously run by founder Sam Bankman Freed.
CoinFLEX noted that CoinFLEX CEO Mark Lamb and co-founder Sudhu Arumugam will continue to be involved with the new entity, adding that they are considering rebranding to the new entity.
Second, the company also tried to address criticism of the venture, arguing that building a new exchange would be worthwhile for both claimants and Coinflex creditors.
CoinFLEX said the funds raised will be used to grow its operations and enhance the equity value of CoinFLEX’s creditors and shareholders.
“This path will not only be an opportunity to serve a large number of existing cryptocurrency creditors, but in doing so will also bring new volume to the exchange through cryptocurrency trading.”
“Above all, we are committed to ensuring that decisions and actions taken by CoinFLEX are in the best interests of CoinFLEX creditors,” he added.
The company was also considering adding other asset classes to its proposed new entity offering, such as stocks and bonds.
“Several avenues are being considered to build regulated venues/exchanges for these assets. We have made great progress in the discussion.”
CoinFLEX also revealed that the final decision on whether to create a new exchange will be made by the company’s “reconstituted board of directors.”
This includes platform depositors, SmartBCH holders or the SmartBCH Alliance, Series B holders, and independent directors elected by the platform depositors with the consent of the Series B holders.
Management said it would abstain from voting on the proposal.
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Some people see CoinFLEX’s plans to launch a new crypto exchange with 3AC as controversial. Because 3AC itself is a bankrupt company and the whereabouts of its founders are still unknown.
In a January 16 Twitter post, former Ripple engineering director Nik Bougalis denounced the newly proposed venture as a “fraud” because it involved 3AC founders Su Zhu and Kyle Davies. Did.
yes @zhusu And Kyle Davis is trying to steal more money! Scammers are going to scam.
But on the other hand, this is so far beyond the insane that there are no words. https://t.co/h2jpiKPmCr
— (@nbougalis) January 16, 2023
Meanwhile, the CEO of crypto market maker Wintermute said his company would “cancel” anyone investing in the new exchange.
Also, since we’re talking about cancellations, if you’re invested in a coinflex/3ac “replacement”, it might be a little harder to work with Wintermute in the future (in terms of relationship building).
— Hopeful Cynic (@EvgenyGaevoy) January 16, 2023
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