No License, No Problem? Dubai's Virtual Asset Authority Issues Warning To OPNX

Dubai's Virtual Assets Regulatory Authority (VARA) has issued a formal warning to the co-founders of the defunct crypto hedge fund Three Arrows Capital for launching and promoting their new digital asset exchange, OPNX, without obtaining the necessary license.

The warning was addressed to the co-founders of OPNX, as well as the firm's CEO, on April 18, as disclosed by a statement from the regulator.

VARA announced it would continue to examine OPNX's activities to determine if additional remedial action is necessary.

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This move against OPNX signals Dubai's regulatory authorities are taking a more rigorous stance on cryptocurrency-related activities, even as the emirate seeks to establish itself as a center for the industry.

This coincides with the United Arab Emirates' broader efforts to be removed from the Financial Action Task Force's (FATF) "gray list" of jurisdictions with insufficient measures to combat illicit funds, as reported by Bloomberg News in April.

Su Zhu, Kyle Davies, Mark Lamb and Sudhu Arumugam founded OPNX this year, positioning it as an exchange specializing in trading cryptocurrency claims.

The founders of Three Arrows Capital, who have been grappling with liquidators to recover funds for their collapsed fund's creditors, have made Dubai one of their primary bases since the fund's failure last summer.

They were previously based in Singapore.

VARA's warning also included OPNX CEO Leslie Lamb, who told Bloomberg that the company has not targeted Dubai or the wider UAE for marketing and is cooperating with VARA's investigation, believing that no rules have been violated.

Lamb further clarified that UAE customers have never been able to open an account on OPNX.

According to the regulator, it discovered in February that OPNX was promoting its yet-to-launch platform and gathering personal data from potential customers via social media platforms without implementing necessary restrictions for Dubai and UAE residents.

Consequently, VARA issued a cease and desist order to the company and its founders on Feb. 27, followed by a second notice on March 10.

OPNX eventually went live on April 4. Afterward, VARA issued an "Investor and Marketplace Alert" regarding the platform.

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