CoinFLEX CEO Calls Out Roger Ver Over Exchange’s Financial Woes
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With the crypto market facing an unprecedented downturn, several platforms have been forced to freeze withdrawals or suspend activities. CoinFLEX, a crypto trading and investment platform, is one such platform.
However, instead of just facing liquidation due to external forces, CoinFLEX’s CEO has now revealed that the company is also owed some substantial sums.
Roger Ver Is the Culprit
In the late hours of Tuesday, Mark Lamb, the CEO at CoinFLEX, confirmed that the company is currently in the process of recovering 47 million USDC from prominent crypto evangelist Roger Ver. In a lengthy Twitter thread, Lamb pointed out that Ver had been a customer of the company, and that his trading account had an agreement with CoinFLEX that obligated him to guarantee any negative equity on account – while also topping up all margin positions regularly.
Roger Ver owes CoinFLEX $47 Million USDC. We have a written contract with him obligating him to personally guarantee any negative equity on his CoinFLEX account and top up margin regularly. He has been in default of this agreement and we have served a notice of default.
— Mark Lamb 💪 (@MarkDavidLamb) June 28, 2022
Ideally, CoinFLEX liquidates accounts before they max out their equity. However, as Lamb explained, the crypto exchange opened a unique “non-liquidation recourse account”. CoinFLEX agreed not to liquidate the account as long as the borrower agreed to keep it filled. Sadly, things didn’t quite work out – the account went negative and wasn’t filled. Lamb has confirmed that this is the only account to go negative.
Lamb added that Ver has failed to meet up with his obligations and that CoinFLEX has now moved to put him in default.
The issue with CoinFLEX began a few days ago. The derivatives trading platform announced in a blog post that it had frozen customer withdrawals to protect its liquidity and balance sheet. CoinFLEX blamed market conditions and liquidity problems on a counterparty at the time.
Besides closing withdrawals, CoinFLEX also confirmed that it had paused futures and options trading in its native FLEX coin. The company explained that it would give customers an update on transactions when it was in a better financial situation.
As expected, the CoinFLEX development immediately led to different speculations concerning what could have been wrong. The company announced a recovery plan on Monday, which includes selling off its bad debt via a $47 million token offering. Interestingly, the same token offering amount is similar to the amount that Ver reportedly owes the company.
When CoinFLEX announced its recovery plan, the company and its management had refrained from pointing the finger at anyone for their problems. The company blamed a certain “high-net-worth individual” for its problems, but they did not mention Ver’s name. For some reason, Lamb has decided to break that jinx.
Ver Strikes Back
Ver has been quick to try to clear his name. In a Tuesday tweet, Ver denied any talk of him defaulting on any debt to a counterparty. Not naming CoinFLEX, the Bitcoin Cash proponent went as far as claiming that the Seychelles-based exchange owed him money.
Recently some rumors have been
spreading that I have defaulted on a
debt to a counter-party. These rumors
are false. Not only do I not have a debt
to this counter-party, but this counter-
party owes me a substantial sum of
money, and I am currently seeking the
return of my funds.— Roger Ver (@rogerkver) June 28, 2022
A short back-and-forth ensued. Lamb expressed his disappointment at Ver for resorting to such tactics in order to deflect from his liabilities. Although it seems both parties have taken their dispute off social media, the market would want to know how this case is resolved.
In the meantime, the derivatives exchange is now working to get back on its feet. CoinFLEX is looking to issue debts to help cover its losses.
As the exchange announced earlier this week, its recovery plan includes issuing Recovery Value USD (rvUSD) – a token from the company that will be worth $1. The exchange designed the crypto asset to aid the recovery of the $47 million in losses. They intend to issue the asset from Tuesday until July 1.
Hi everyone, we’re sharing our latest update on plans for re-enabling withdrawals on the platform 👇https://t.co/34brwoDYuL
— CoinFLEX (@CoinFLEXdotcom) June 27, 2022
CoinFLEX will issue rvUSD to “sophisticated investors” at a subscription of $100,000 per investor. As CoinFLEX explained, investments will come with a 20% annual percentage rate paid in rvUSD. According to the exchange, sophisticated investors are those with at least $1 million in net worth and an annual income of no less than $200,000.
Lamb has also claimed that he won’t be issuing unique accounts similar to Ver’s anymore. Also, CoinFLEX will look to bolster its transparency by publicising the notional dollar value of all accounts’ futures positions through an auditing firm.
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