Dubai's Vara fines digital asset exchange Opnx and Three Arrows founders

Crypto platform has not paid a $2.7 million penalty issued by regulator which also imposed a $54,451 sanction against each of Su Zhu and Kyle Davies as well as Opnx co-founder Mark Lamb and chief executive Leslie Lamb

Dubai’s Virtual Assets Regulatory Authority has fined Open Technology Markets (trading as Opnx) and its founders. Bloomberg

Dubai’s Virtual Assets Regulatory Authority has issued a Dh10 million ($2.7 million) fine against digital assets exchange Open Technology Markets (trading as Opnx) for breaching rules related to marketing, advertising and promotions.

The fine for the market offence on May 2 remains unpaid, the emirate’s virtual asset regulator said on Wednesday.

The exchange is linked to the founders of failed cryptocurrency hedge fund Three Arrows Capital.

A fine of Dh200,000 ($54,451) has also been imposed against each Opnx founder Kyle Davies, Su Zhu and Mark Lamb, and the company’s chief executive, Leslie Lamb.

Mr Davies and Mr Zhu were founders of Three Arrows Capital that went bankrupt last year as Bitcoin's value plummeted and UST stablecoin lost its peg to the US dollar. The latest fines are the biggest by the regulator to date.

“All fines noted above were referred to Vara’s grievance committee in accordance with due governance requirements. The committee reviewed the referral of the grievance and determined that the enforcement actions taken be upheld in their entirety,” the regulator said.

“Vara shall determine consequential actions warranted against Opnx, which may include further fines, penalties, and/or taking any actions necessary to recover payment and definitively remedy the behaviour including, but not limited to, referring the matter to any law enforcement agency (ies) or competent courts.”

Vara was established by Sheikh Mohammed bin Rashid, Vice President and Ruler of Dubai, in March 2022 under the Dubai Virtual Asset Regulation Law, the first law of its kind in the emirate.

It aims to create an advanced legal framework to protect investors and provide international standards for virtual asset industry governance to enable responsible business growth.

Launched in March, Opnx is a public marketplace for crypto claims trading and derivatives. It is pitched as a platform to trade crypto claims associated with bankrupt digital-asset entities.

The cryptocurrency sector went through a troublesome year in 2022, marred by company collapses and cyber crimes dragging down the prices of digital assets and investor interest.

The most notable incident was the collapse of FTX, which filed for bankruptcy in November. That followed the collapse of the Luna cryptocurrency and its associated Terra stablecoin in May last year.

In January this year, Genesis Global Holdco, the parent company of cryptocurrency lending company Genesis Global Capital, filed for bankruptcy protection in the US.