- Dubai’s VARA hits OPNX with a $2.7M penalty for not meeting market requirements.
- Both associated coins, $FLEX & $OX, plummeted 7% following the legal setbacks.
- OPNX exchange lets trade bankruptcy claims, including the co-founder’s CoinFLEX.
Legal trouble follows the controversial crypto entrepreneurs Su Zhu and Kyle Davies as the duo stumbled into a massive penalty for breaking Dubai’s regulatory rules earlier this year. On Wednesday, the Virtual Assets Regulatory Authority (VARA) issued a penalty notice for the crypto exchange, costing the pair $1.8 million, or 10 million in United Arab Emirates Dirhams (AED).
Indeed, the notice by UAE regulatory authorities specifies that this fine is linked to an earlier reprimand. In May, OPNX was warned of possible legal consequences due to failing to register with the local authorities.
OPNX’s whole first week was marked with laughable amounts of trading volume, instant legal trouble, and backlash from the crypto community. For instance, BitMEX’s co-founder Arthur Hayes dropped a sarcastic comment saying that OPNX is working on “making it up” both the negative margins of OPNX exchange and the unsettled debt from Three Arrows Capital (3AC).
Biggest Fine Since Establishment
VARA’s $2.7 million fine goes down in the crypto history books as the largest fine by this legal entity so far. Dubai, one of the world’s leading crypto hubs, decided to crack down on unregulated companies in the region. The new ruling, applied just last year, means that every crypto firm in the UAE has to register with VARA.
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This is being done as a part of the latest UAE crusade to get off the unfavorable gray list on the Financial Action Task Force. The intergovernmental organization formed in 1989 by the initiative of G7 previously accused UAE’s authorities of not doing enough to stop illicit funds.
Davies and Zhu attempted to soften the blow of the cryptocurrency market’s mishaps in 2022 by fleeing to Dubai and launching a new exchange focused on debt claims. While the OPNX exchange experienced a languid start, both tokens associated with the firm had their fair share of bull momentum.
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To illustrate, Open Exchange Token (OX) shot up from the initial $0.01 offering price to the all-time high of $0.081313 eight days ago but has plummeted 20% since. With a market cap of $236,997,713, $OX sits comfortably in the TOP 150 by global market capitalization.
Flex Coin (FLEX) has skyrocketed by 1643% in yearly terms, despite the originally associated exchange CoinFLEX going through bankruptcy procedure and legal turmoil. Similarly to $OX, $FLEX just fell victim to the market-wide cryptocurrency meltdown – $FLEX lost 9.5% in the last 24 hours and 21% of its value since last week.
On the Flipside
- Besides, the $2.7 million collective fine on OPNX is not all. The punitive measures by Dubai’s regulators have also been implied on the four co-founders of the OPNX exchange separately.
- According to the official notice, the $54,000 fines for failing to comply with local marketing and advertisement requirements imposed on Kyle Davies, Su Zhu, Mark Lamb, and Leslie Lamb have already been paid off.
Why This Matters
Three Arrows Capital was once a highly successful crypto hedge fund that went down during Terra Luna’s USTC depegging. The co-founders continued their business ventures despite being on the run from Singaporean authorities.
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