Dubai authorities fined the co-founders of failed crypto hedge fund Three Arrows Capital in their latest enforcement action against the duo’s new digital-asset exchange OPNX.

The Virtual Assets Regulatory Authority (VARA) said it had issued the company a fine of Dhs10m ($2.7m) in May that remains unpaid.

VARA fines OPNX for flouting rules

The Dubai regulator said individual penalties of 200,000 dirhams ($54,451) for Su Zhu and Kyle Davies along with OPNX’s two co-founders for failures to abide by the rules for marketing, advertising and promotions have been paid.

In light of the company’s unpaid fine, “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 behavior,” VARA said.

Dubai has taken a stricter approach to crypto this year, launching a new regulatory regime that requires firms catering to retail investors to be fully licenses’ by VARA.

That’s part of a broader effort by the United Arab Emirates to get off the Financial Action Task Force’s “gray list” of jurisdictions that don’t do enough to uncover illicit funds.

Zhu and Davies helped set up OPNX with Mark Lamb and Sudhu Arumugam this year, marketing it as an exchange to trade crypto claims.

The Three Arrows founders, who’ve been sparring with liquidators trying to recover money for creditors of their fallen fund, have made Dubai one of their primary bases since its implosion last summer.

VARA has said it became aware in February that OPNX was soliciting customers for its platform and collecting personal data. Lamb and Arumugam, along with OPNX CEO Leslie Lamb, have also been reprimanded by the regulator.

The OPNX co-founders didn’t immediately respond to requests for comment.

Leslie Lamb told Bloomberg in May that the firm hadn’t done any marketing targeting Dubai or the wider UAE. She said OPNX was cooperating with VARA’s investigation and didn’t believe it violated any rules.

At the time, Zhu had said that “while Kyle and I helped contribute the initial ideas for OPNX, Leslie is very much the CEO and we aren’t involved in day to day.”

Both Zhu and Davies have kept promoting OPNX on X, the platform previously known as Twitter.