A digital-asset exchange linked to the founders of failed hedge fund Three Arrows Capital is seeking to take control of ailing crypto lender Hodlnaut, whose restructuring is being overseen by a court in Singapore.
The exchange, OPNX, has offered to inject the equivalent of US$30 million in FLEX digital tokens into Hodlnaut to fund a partial creditor payout to finalize claims, according to a person familiar with the matter who asked not to be identified discussing private information, and a term sheet seen by Bloomberg News.
FLEX is associated with the CoinFLEX exchange, whose founders Mark Lamb and Sudhu Arumugam started OPNX this year. FLEX has a market value of about US$729 million and trading volume of just US$143,000 over the past 24 hours, a period when it climbed 15% to US$7.39, based on CoinGecko data as of 2:45 p.m. in Singapore.
The OPNX offer, which may or may not prove successful, was submitted to the court after the interim judicial managers supervising Hodlnaut’s restructuring objected to the distressed firm’s directors emailing the bid directly to its users, according to the person familiar with the matter and a July 29 letter from the administrators seen by Bloomberg News.
Capital injection
After the capital injection with FLEX, OPNX would own 75% of Hodlnaut, the term sheet shows. If creditors approve the plan, they would get 30% of their claims in FLEX and other tokens, or a pro-rata payment of up to 95% of the total available corporate asset pool, whichever is higher, according to the document.
“We see a lot of potential in the Hodlnaut platform and look forward to working closer with them,” Lamb said in response to an emailed request for comment.
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The Three Arrows founders Su Zhu and Kyle Davies also helped to get OPNX off the ground and have repeatedly touted it on X, the social media platform formerly known as Twitter. Zhu has previously said he and Davies contributed initial ideas for OPNX but aren’t involved in daily management.
OPNX has been pitched as a venue to trade crypto claims such as those associated with bankrupt digital-asset outfits. Three Arrows imploded in 2022 as leveraged crypto bets went awry, exacerbating a digital-asset rout that contributed to the collapses OPNX is now tapping as a business opportunity.
Hodlnaut saga
Hodlnaut — which is based in Singapore and has operations in Hong Kong — was among the casualties, suspending withdrawals a year ago and then entering into a court-based restructuring in the city state. Neither Hodlnaut nor the judicial managers immediately responded to emails seeking comment about the OPNX bid.
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Hodlnaut’s founders Simon Lee and Zhu Juntao earlier this year proposed selling the business as a better option for creditors than liquidating the embattled firm. Back in January, key creditors had rejected a proposed restructuring plan and said they preferred liquidation.
Zhu, Davies, Mark Lamb, OPNX Chief Executive Officer Leslie Lamb and Arumugam were reprimanded by authorities in Dubai in April for operating and promoting OPNX without the required local license.
The liquidators of Three Arrows have accused Zhu and Davies of failing to cooperate meaningfully with their investigation. The liquidators are seeking to recover US$1.3 billion from the two, reflecting the losses they are accused of racking-up in the months before the firm collapsed.
Zhu has previously said that his and Davies’ good-faith effort to cooperate with liquidators “was met with baiting.” In email correspondence submitted to a New York bankruptcy court by the liquidators, counsel to Davies and Zhu have said that court orders the liquidators have obtained are “baseless.”
