Regulatory authorities in Dubai have imposed a hefty fine of $2.7 million on the founders of the once-prominent crypto hedge company, Three Arrows Capital. The penalty comes in connection with their association with the OPNX digital asset market, as reported by the Virtual Assets Regulatory Authority (VARA).
Dubai’s Virtual Assets Regulatory Authority (VARA) has taken stern action against the cryptocurrency exchange, OPNX, and its founders, Kyle Davies and Su Zhu. This fine, underscores the consequences of non-compliance with the regulatory framework, put forth by VARA. VARA previously criticized the founders in May for their involvement in OPNX.
Following the failure of their hedge fund, Three Arrows Capital (3AC), Davies and Zhu ventured into the creation of OPNX. This marketplace facilitated the trading of bankruptcy claims from companies like FTX and CoinFLEX. The launch drew sharp criticism due to its unconventional nature.
An accumulation of unpaid fines of 10 million dirhams ($2.7 million) has prompted VARA to take strong action. Su Zhu and Kyle Davies, OPNX co-founder Mark Lamb, and CEO Leslie Lamb have been fined 200,000 UAE dirhams ($54,451). The penalties are in relation to violations involving marketing, advertising, and promotional laws.
Dubai’s regulatory agency has signaled that further actions against OPNX are contingent upon the company’s ability to satisfy the imposed fines. Any subsequent measures, such as additional fines, sanctions, or other actions, will be implemented to ensure compliance and address any transgressions more firmly.
Despite its ambitious concept, OPNX began its operations modestly, processing less than 2,000 transactions totaling just under $2 on its inaugural day. Notably, prominent businesses initially believed to support OPNX have distanced themselves from any involvement.
Dubai has heightened its oversight of the cryptocurrency landscape throughout the current year. A new regulatory framework mandates that companies catering to retail investors must secure a license from VARA. This initiative aligns with the United Arab Emirates goal of being removed from the “gray list” maintained by the Financial Action Task Force, which identifies territories with inadequate capabilities to detect illicit financial activities.
Launched this year, OPNX saw considerable contributions from founders Zhu and Davies. The platform was initially marketed as a venue for trading Bitcoin claims. After the collapse of their hedge fund last summer, Dubai became a pivotal center for the founders of Three Arrows to navigate disputes with liquidators seeking to recover funds for their creditors.
The fine imposed on OPNX marks a significant milestone for VARA, representing the largest penalty since the agency’s establishment the prior year. In February, VARA highlighted the company’s aggressive pursuit of platform users and collecting personal data, reflecting a proactive approach to compliance.
The regulatory actions taken against Three Arrows Capital’s founders and their involvement with OPNX underscore the evolving landscape surrounding cryptocurrencies in Dubai. As the regulatory environment becomes increasingly stringent, businesses operating in this sector must navigate carefully to ensure adherence to established guidelines.
The imposition of a $2.7 million fine on the founders of Three Arrows Capital is a significant development in Dubai’s regulatory journey concerning digital assets. The case of OPNX highlights the complex interplay between regulatory compliance, market innovation, and the consequences of nonconformity. As cryptocurrency evolves, industry players must remain attentive to regulatory changes to avoid such repercussions in an increasingly scrutinized sector.
