The presentation of the exchange was leaked to the media and was criticized for the participation in it of the bankrupt crypto hedge fund Three Arrows Capital.
Amid growing criticism on social media, crypto investment firm CoinFLEX has attempted to clarify its plans to launch a new crypto exchange with Three Arrows Capital (3AC).
A leaked presentation on January 16 showed that it is partnering with a bankrupt hedge fund to create a crypto exchange project called “GTX” that will focus on trading claims against bankrupt companies.
In a blog post published shortly after, CoinFLEX went on to “clarify leaked misconceptions regarding the GTX exchange project.”
First, CoinFLEX stated that it will not actually use the name “GTX” as stated in the presentation, noting that it currently only serves as a placeholder name.
Some community members pointed out its similarity to the name of the recently collapsed FTX cryptocurrency exchange, which was previously run by founder Sam Bankman-Fried.
CoinFLEX added that it will consider renaming itself under the new organization, noting that CoinFLEX CEO Mark Lamb and co-founder Sudhu Arumugam will continue to be involved with the new organization.
Secondly, the firm also attempted to respond to business criticism by arguing that the creation of a new exchange would be valuable for both debt holders and Coinflex creditors.
CoinFLEX stated that all funds raised will be used for operational growth, thereby increasing its net worth to CoinFLEX creditors and shareholders.
This path will not only serve a large number of existing crypto lenders, but will also bring new volumes to the exchange through crypto trading.
“First and foremost, we are committed to ensuring that all decisions and actions taken by CoinFLEX are in the best interest of CoinFLEX lenders,” he added.
The firm also considered adding other asset classes to the new entity’s proposed offerings, such as stocks and bonds.
“Several ways are being considered to create regulated platforms/exchanges for these assets. Over the past few months, we have made significant progress in negotiations with regulators and partners in reputable jurisdictions,” he said.
CoinFLEX also clarified that the decision to establish a new exchange would be made by the company’s “reconstituted board of directors”.
This will include Platform Contributors, SmartBCH Holders or SmartBCH Alliance, Series B Holders, and an Independent Director to be elected by Platform Contributors with the consent of Series B Holders.
He noted that management would abstain from voting on the proposal.
Some consider CoinFLEX’s plans to launch a new cryptocurrency exchange with 3AC controversial as 3AC itself went bankrupt and the whereabouts of its founders are still unknown.
In a January 16 Twitter post, former Ripple CTO Nick Bugalis criticized the newly proposed venture, calling it a “scam” due to the involvement of 3AC founders Su Zhu and Kyle Davis.
So @zhusu and Kyle Davis are trying to steal more money! On the one hand, I can’t say that I’m surprised: scammers rip off.
But on the other hand, it’s so crazy that there are no words for it. The pride and arrogance of these assholes really knows no bounds. https://t.co/h2jpiKPmCr
— (@nbougalis) January 16, 2023
Meanwhile, the CEO of crypto market maker Wintermute said his company will “cancel” anyone who invests in the new exchange.
And since we’re talking about canceling actions, if you’re investing in the coinflex/3ac “exchange”, it might be a bit more difficult for you to work with Wintermute in the future (on the relationship building side).
— pious cynic (@EvgenyGaevoy) January 16, 2023