The method of selling the solution to the problem you created reached new heights yesterday.

Su Zhu and Kyle Davies are the founders of hedge fund Three Arrows Capital (3AC), which went bust in June, taking the crypto market with it, including lending platform Celsius. Zhu and Davies have now teamed up with Mark Lamp and Sudhu Arumugam, who founded the exchange Coinflex. Coinflex also went under in the aftermath of the June bankruptcies, but managed to salvage itself somewhat through a restructuring and token issuance.

Sounds like a dream team, right? But wait and see what the four of them plan to build together.

A presentation went public through which Zhu, Davies, Lamp and Arumugam are looking to raise $25 million in investment capital. Zhu confirmed to Wu Blockchain that the presentation is genuine.

The four plan to launch a new exchange, the working title is currently GTX. However, this exchange will not only allow trading in cryptocurrencies and, later, stocks — but also, and especially, in claims — that is, claims to the bankruptcy assets of failed crypto companies. The presentation explicitly mentions creditors’ claims against FTX, Celsius, BlockFi and Mt.Gox. They are expected to release around $20 billion.

So: Zhu and Davies, who played a key role in the collapse of crypto markets in 2022, are now helping those who owe money to bankrupt crypto companies to turn it into cash. Yes, you should even be able to trade claims against Coinflex itself. Is this some kind of charity, stone-cold cynicism — or a premature April Fool’s joke?

While the business venture drips with irony to the point that almost everyone thought it was a gag at first — it does have merit. It’s a good idea that has potential far beyond the crypto market. After all, buying and selling claims on insolvent companies is cumbersome, expensive and impossible for small holders on other platforms. So risk-taking funds can’t buy the claims, and creditors are left sitting on illiquid claims for a long time. Things could be better.

On the new exchange, claims against insolvent crypto firms such as FTX or Celsius should now be immediately tradable and usable as collateral to borrow other assets or currencies. This would make “GTX” the only exchange where one can trade and collateralize such claims with an order book. There have been reports that the claims will be tokenized in the process, which would be obvious and exciting, but I have not been able to confirm this yet.

Looking further ahead, the new exchange is expected to initially accommodate crypto assets with a view to integrating equity trading in the long term. The up to $20 billion currently lying idle as receivables from bankrupt crypto companies is intended to bring liquidity to the order book as a kind of kickstart. In doing so, GTX hopes to jump into the void left by FTX’s failure.

As interesting as the idea is, it is risky. Repackage debt as securities, collateralize it, possibly tokenize it, allow it to be traded — what could go wrong? 3AC’s bankruptcy doesn’t seem to have spoiled Su Zhu and Kyle Davies’ appetite for risk. That, as absurd as it sounds, deserves respect in a somewhat oblique way.