OPNX violations land 3AC founders with $2.7M fine by Dubai’s VARA

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Three Arrows Capital (3AC) founders Kyle Davies and Su Zhu have been slammed with a hefty fine by Dubai’s Virtual Asset Regulatory Authority (VARA) over the operations of their new exchange, OPNX.

According to an official notice, VARA announced that it had issued a fine of AED 10 million (US$2.7 million) against OPNX for violating existing rules and failing to seek proper registration. A community reading of the notice reveals that the fine was imposed in May and remains unpaid.

The digital currency watchdog also imposed an AED 200,000 (US$54,000) fine on individual executives of the exchange for breaching rules on digital assets promotions. The individuals include OPNX founders Kyle Davies, Su Zhu, Mark Lamb, and company CEO Leslie Lamb with VARA confirming that the individuals in question have paid the fines.

VARA added that the decision to impose the fines follows due process and was referred to its Grievance Committee for confirmation. Per the statement, the Grievance Committee green-lit the penalties stating “that the enforcement actions taken be upheld in their entirety.”

Since the $2.7 million fine against OPNX remains unpaid, VARA says it will explore a range of punitive actions against the exchange.

“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,” the notice read.

In April, embattled 3AC founders announced the creation of the new exchange, setting their sights on Dubai as a base for their operations. VARA claimed that the exchange had begun soliciting new customers in Dubai without considering existing restrictions.

After issuing a cease-and-desist order to OPNX and its founders, VARA followed up with an Investor and Marketplace Alert to warn residents against investing on the platform. Despite the weighty claims, OPNX executives maintain that they are not violating VARA rules.

Both Davis and Zhu are still slugging it out in bankruptcy court with creditors after the collapse of 3AC, with critics accusing the duo of running a fraudulent enterprise.

VARA’s no-nonsense approach to regulation

Despite allowing an influx of digital currency firms to operate in the Emirate, VARA maintains high regulatory standards to weed out bad actors. VARA suspended the operational license of BitOasis for failing to meet requirements, forcing the exchange to open new discussions with the regulator.

“BitOasis is working closely with VARA on fulfilling the remaining conditions and is committed to providing a safe and secure service to its users,” BitOasis said at the time.

The regulator has rolled out market regulations, a schedule of fees, and robust rules on promoting and advertising digital currency services.

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Ethereum, FTX and Tether—who have co-opted the digital asset revolution and turned the industry into a minefield for naïve (and even experienced) players in the market.