The founders of the now-defunct crypto hedge fund Three Arrows Capital (3AC), Zhu Su and Kyle Davies, have announced plans to launch a new token dubbed the “Justice Token,” aimed at an anonymous whistleblower who revealed information about Terraform Labs, according to a recent report.
The surprise move comes just months after 3AC, once worth over $10 billion, filed for bankruptcy due to losses from the collapse of Terra’s LUNA and UST tokens. While legal proceedings continue against several parties involved in the Terra saga, including the pseudonymous whistleblower known as “FatManTerra,” 3AC’s founders seem intent on inserting themselves into the situation once again.
Dubious ‘Justice’ Motivations
In a tweet from 3AC’s new venture, an exchange called Open Exchange, the Justice Tokens are portrayed as a method to “return the cost of harm to the community affected by defamation.” However, the tokenomics laid out in the whitepaper suggest otherwise.
The total supply is set at 1 billion, described as “independent meme tokens without intrinsic value or backing.” Distribution plans allocate 75% to Open Exchange platform users, 20% to liquidity providers, and 5% to an NFT community.
This approach and the stated motivations have raised skepticism within crypto circles. Legal experts have noted defamation suits are handled through courts, not invented tokens. The launch appears more akin to trolling the Terra community under the guise of justice.
Fallout From the Terra Collapse
The implosion of Terra’s algorithmic stablecoin UST and sister token LUNA ranked among the most dramatic crypto failures of 2022. Multiple major firms like 3AC bet big on LUNA and faced ruin when prices cratered.
Anonymous Twitter user FatManTerra had called attention to the rocky foundations of UST and potential problems with Terra founder Do Kwon’s plans. His criticisms made him a target for the project’s supporters, who accuse him of spreading misinformation.
Investigations into Terra are ongoing, with South Korean prosecutors indicting Kwon and five others connected to Terraform Labs in the meltdown. U.S. regulators have also opened a probe into the fiasco. But Terra critics like FatManTerra now face their own lawsuits.
Old Habits Die Hard?
3AC’s founders seem eager to jump back into stirring up controversies within crypto despite the enormous damage caused by their firm’s collapse.
After defaulting on withdrawals and owing creditors billions, they went on to launch a new exchange, Open Exchange, in April. The platform focuses on crypto claims trading — allowing users to speculate on bankruptcy outcomes.
Now the Justice Token aims to heighten tensions between the warring factions in the Terra aftermath. However, trying to profit from others’ misfortunes while escaping accountability for 3AC’s own actions appears to be testing the patience of the crypto community.
The motivations behind 3AC’s latest move are questionable at best. Attempting to enact vague ‘justice’ by minting useless tokens allows Zhu, Davies, and associates to troll genuine victims without helping anyone. If 3AC wants to promote fairness, its founders should focus on transparency, making creditors whole, and working to restore trust after losing so much value through incompetence or greed.