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Dubai’s Virtual Assets Regulatory Authority, commonly known as VARA, has flexed its regulatory muscles again. Consequently, crypto exchange OPNX and its founders have been served a significant penalty.
3AC Founders face backlash
No strangers to the financial world, Kyle Davies and Su Zhu once led the failed hedge firm Three Arrows Capital. Following its collapse, the duo shifted their focus to the launch of OPNX. However, this decision was met with tremendous backlash since OPNX allowed investors to exchange bankruptcy claims of companies, notably FTX and CoinFLEX.
Despite some trading entities making grand claims of their investments in OPNX, the reality was starkly different. Significantly, the platform reported a paltry $2 in trades during its debut 24 hours. Furthermore, the exchange was swift to deny these claims of hefty stakeholder investments.
Notably, Arthur Hayes, co-founder of BitMEX and CIO of Maelstromfund, sarcastically remarked that OPNX, with negative margins, is operating under the assumption that it will “make it up on volume.”
$2.7mm fine for $2 of trading volume. They are def in the VC game, -ve margins, “we’ll make it up on volume” well played sers. 😭😭😭😭😭😭 https://t.co/lrEdCZCvSA
— Arthur Hayes (@CryptoHayes) August 16, 2023
VARA’s response: Heavy fines and warnings
In light of the market offense, VARA has imposed a fine of 10M United Arab Emirates dirhams (equivalent to $2.7 m) on OPNX. This penalty is grounded in regulations set earlier this year. The founders, including Davies, Zhu, and the Lambs, also faced separate penalties for marketing and advertising breaches. These fines, totaling around $54,000, have been settled in full.
However, the initial hefty fine against OPNX remains unpaid. Hence, VARA has not minced its words, warning of additional penalties and enforcement actions if this situation persists.
Besides these specific penalties, VARA’s Grievance Committee thoroughly reviewed all these decisions. This move ensures that due governance requirements are met. Moreover, the committee has decided to uphold these enforcement actions.
As the realm of virtual assets continues to evolve, the role of regulatory bodies like VARA is proving pivotal. With heavy fines and clear warnings, the message is loud and clear: non-compliance will not be taken lightly.
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