The Defiant

Controversial Open Exchange Token Rallies On Conversion Plan

Three Arrows Founders Promote New Venture While Bankrupt Hedge Fund Owes Creditors Over $3B

By: Owen Fernau Loading...

Controversial Open Exchange Token Rallies On Conversion Plan

Most altcoins have been decimated over the past few weeks as a slew of regulatory actions led investors to dump their riskiest digital assets.

But amid the carnage, the FLEX token, which Three Arrows Capital founders Su Zhu and Kyle Davies adopted for use in their new venture, Open Exchange, has emerged as an unlikely winner.

FLEX Price

The FLEX token has more than doubled after a June 1 announcement from Open Exchange that it will offer one-way conversions of the FLEX token to OX, which can be staked for discounts on the exchange. FLEX has a market capitalization of over $200M at the time of writing, but that will dwindle as people convert their tokens to OX.

Su Zhu and Davies, whose crypto-focused hedge fund, Three Arrows Capital, went bankrupt in spectacular fashion last year, are behind Open Exchange, which is looking to tokenize bankruptcy claims for most of 2022’s high-profile crypto failures like Celsius, FTX, and none other than Three Arrows itself.


Zhu and Davies have reportedly been “surfing, meditating and traveling the world” while continuing to dodge creditors.

That disgraced founders can start a new venture and gain traction speaks to the ease with which major players in crypto can quickly come back from high-profile failures.

At $20M in daily volume, Open Exchange’s usage is still modest compared to the billions processed by a leading exchange like Binance. Still, Open Exchange’s volume was hovering around $5M last month.


Alice, a pseudonymous trader participating in Open Exchange’s market-making program, is wary of the exchange and its founders but isn’t willing to write the venture off. “I'm not gonna put a huge chunk of my net worth on there, but as far as I can see, they are acting in good faith,” they told The Defiant.

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Kain Warwick, the founder of Synthetix, a well-known derivatives platform, was less charitable when The Defiant asked what advice he would give to people considering using Open Exchange.

“Look, I doubt they’d be brazen enough to steal everyone’s money, but we also should not reward bad actors in the space,” Warwick said. He added that he would personally avoid the exchange.

To explain FLEX’s price action, Alice noted that the token’s circulating supply is relatively low. This means that it doesn’t take much demand to move its price due to low liquidity.

Traders may also be acquiring FLEX because of a 25% bonus in OX tokens that is being offered if they stake those assets. Staking on the exchange corresponds to lower trading fees. The OX whitepaper also states that the discount for stakers will be higher during the first year.

Alice, for one, is withholding judgment on whether Davies and Zhu are trying to build a legitimate business. “They definitely have to prove themselves again,” they said. “I appreciate the sense of humor they seem to have about the whole thing.”

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