Zhu Su & CoinFLEX Give New Updates About Planned “GTX” Cross-Asset Exchange

Earlier today, it was reported that Su Zhu and Kyle Davies, founders of the now-defunct Three Arrows Capital, are attempting to raise $25 million to launch a new cryptocurrency exchange called GTX. This exchange will offer holders of FTX claims the opportunity to transfer them to GTX and receive immediate credit in a token called USDG. 

The name of the exchange is a reference to the failed crypto exchange FTX, since “G” comes after “F” in the alphabet. They are partnering with Mark Lamb and Sudhu Arumugam, the minds behind CoinFlex, which is also currently undergoing restructuring.

A little bit later, The Wall Street Journal reported about the new idea with more details.

According to Mr. Zhu, GTX is not the company’s official moniker. Last year, a flurry of cryptocurrency businesses sought bankruptcy protection as the value of various coins dropped and financial hardship spread throughout the sector.

A nearly $2.4 billion debt from cryptocurrency lender Genesis Global Capital was in default by Three Arrows last year. The lender’s parent business, Digital Currency Group Inc., asserted a claim against Three Arrows for nearly $1.2 billion. The company owned by Messrs. Zhu and Davies was ordered to be liquidated by a British Virgin Islands court last summer after being sued for debt collection by DCG and other creditors.

Some Three Arrows creditors, according to Mr. Zhu, would have the choice to convert their claims into ownership in the brand-new claim-trading business.

Based on the theoretical value of such claims, GTX calculated in its presentation deck that the market for crypto claims is worth $20 billion. By charging less, GTX hopes to outperform rival bankruptcy-claims trading firm Xclaim Inc.

The leaked pitch deck can be found here: https://www.docdroid.net/7k8oW7r/gtx-pdf

CoinFLEX publishes official update, also confirms GTX is just a placeholder name

Not only Zhu Su, but also CoinFLEX spoke about the new exchange today. The company released an official statement not too long ago. In the update, it is stated that:

“We understand that there has been media speculation and are writing to clarify misconceptions about the leaked materials concerning the proposed “GTX” Exchange. Please note that given the nature of ongoing discussions with various parties, we have not been able to share an update about the proposed plans, but aim to do so once a possible round or partnership materializes.

Building a marketplace for trading claims (in addition to crypto and potentially other assets) is an evolution of CoinFLEX’s commitment to building open and transparent financial markets. Any new funds raised will be used for operational growth, which we strongly believe will increase value for CoinFLEX creditors. This avenue will not only be an opportunity to serve a large number of existing crypto creditors but, in doing so, will also bring new volumes to the exchange through crypto trading.

Above all, we are committed to ensuring that any decisions and actions taken by CoinFLEX are in the best interest of CoinFLEX creditors.”

Source: https://coinflex.com/blog/coinflex-update-january-16-2023/

The update also reveals that Mark and Sudhu will remain on board, with Mark as the CEO. As funds are raised, CoinFLEX may see the addition of more key members as the company looks to expand its operations with the new exchange entities.

It is also stated that CoinFLEX could be rebranded into this new entity. It will not use the name GTX, which is currently serving as a placeholder name. It is also exploring the possibility of creating exchanges for other asset classes, each with its own entities and brand names, under the HoldCo that creditors will receive equity in after the restructuring. It is believed that these business lines will significantly increase the value of the equity.

CoinFLEX creditors/Series B will be the largest class of shareholders, and other advantages are being discussed. The funds raised will be used to grow the company and increase its equity value for shareholders, including the CoinFLEX creditors.

The company aims to provide liquidity to current crypto creditors from various platforms and bring in new trading volumes to the exchange through crypto trading. It is looking at adding other asset classes such as equities and bonds, and plans to build regulated venues/exchanges for these assets. In recent months, it has made progress in talks with regulators and partners in respected jurisdictions, which will improve the value of the equity issued to CoinFLEX creditors as it creates open markets for assets without transparent marketplaces.