The hedge fund that filed for bankruptcy last year has been roasted by victims and crypto-industry observers in the wake of its epic collapse, but one partner, Kyle Davies, says "karma" motivates the founders to give back.

Two founders of the bankrupt crypto hedge fund Three Arrows Capital (3AC) will donate "future earnings" to creditors who lost money after its implosion last year, one of them, Kyle Davies, said Monday in a Twitter Spaces hosted by Mario Nafwal.

Davies described the plan as a "shadow recovery process," outside the ongoing liquidation proceedings that are trying to recover value from the bankrupt company and distribute it to creditors. In fact, some early creditors have already been made whole, he said.

The failed hedge fund manager said he and his co-founders believed in "karma" and that any of these extra donations would supplement any recoveries through the formal process.

The comments might be taken with a grain of salt by a crypto community and creditors who are still nursing losses from the epic collapse.

"The founders of Three Arrows have willfully ignored multiple requests to assist with this process after initiating the liquidation themselves, and the court records paint a clear picture of the ways in which they have hindered creditor recoveries," a spokesperson for Teneo, the 3AC liquidator, said in an email to CoinDesk, when asked for a response to Davies' comments. "Instead of promising creditors future earnings from a nascent venture, we would recommend that the founders engage in the court-ordered activities already underway."

The spokesperson alleged.

"We have this process by which we will donate over time," Davies said. "We very much believe in the idea that if we do good and we say, you know, creditors who lost money, they have a way to make more back."

Davies made the comments after being asked about the optics of him and Su Zhu, the other co-founder, working on a new crypto exchange from the beaches of Bali, while their previous company was undergoing a liquidation process. He said that there is a "connection" between their new venture and creditors, who will in fact benefit from their new enterpreneurial journey.

The two have launched a trading platform called Open Exchange (OPNX) to trade bankruptcy claims. The exchange claims that there are 20 million users with $20 billion in claims, after major players like Celsius Network and FTX have filed for Chapter 11 protections in the past year's market rout. The exchange, called Open Exchange (OPNX), was announced in February, less than a year after the hedge fund imploded along with $2.5 billion in customer deposits.

"One of the things we really believe in is karma," and that there is "something greater than all of us," Davies said in the Twitter Spaces.

Asked about OPNX's progress in the Twitter Spaces, Davies said that "it's a journey" and that they are seeing about $50 million in daily trading volume at the moment.

The shadow recovery process described by Davies doesn't involve a tokenized asset, he said. The founder did not respond to CoinDesk's request for comment to clarify the mechanism at the time of publication.

Currently, only claims from lender Celsius are tradeable on the platform, but claims in the bankruptcies of FTX, Genesis, BlockFi, Voyager, Hodlnaut, Mt. Gox, Vauld, Zipmex and even Three Arrows Capital are "coming soon," according to its...

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