CoinFLEX Resumes Withdrawals as Roger Ver Dispute Drags on
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CoinFLEX, one of the crypto companies severely affected by the current bear market, resumed fund withdrawals earlier this week. The crypto exchange, which paused withdrawals about a month ago, has devised a recovery plan amid a liquidity crisis that threatens its future.
10% Withdrawals Available for Now
Earlier this week, CoinFLEX confirmed in an official announcement that it would resume withdrawals. The broker intends to quell customers’ fears following its decision to suspend them a little over three weeks ago.
As CoinFLEX explained, the withdrawals would only be partial for now. Customers can move only 10% of their total balances off the platform. These limitations are in place so CoinFLEX can increase its spending cap – or perhaps eliminate it – as soon as possible. Also, CoinFLEX announced that it would cancel all existing withdrawal requests and return the funds to the respective user accounts. Users who initiated requests earlier will now be able to re-initiate them, but with the new 10% spending limit.
The remaining 90% of user funds will be considered “locked”. Although the funds will remain in users’ balances, they won’t be withdrawable, tradable, or usable as collateral.
This new directive will be implemented for all supported coins on CoinFLEX – except for flexUSD. CoinFLEX announced that the interest-bearing stablecoin will be non-withdrawable until further notice.
The saga surrounding CoinFLEX is similar to the troubles of many crypto companies. The broker faced liquidity problems and had challenges with customer withdrawal requests. In hopes of stemming the tide, the broker announced last month that it would suspend all withdrawals, Placing the blame on the current market condition and a liquidity crisis.
However, more details have emerged concerning CoinFLEX’s problems. In a Twitter announcement last month, CEO Mark Lamb outed Bitcoin Cash proponent Roger Ver as the reason for CoinFLEX’s troubles. At the time, Lamb explained that Ver owed CoinFLEX 47 million USDC tokens, which he used to make trades on the exchange’s professional trading platform.
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 trading accounts before they run out of equity. However, as Lamb explained, the exchange had entered into a unique “non-liquidation recourse account” with Ver, allowing him to keep his trading account open. The agreement allowed Ver to borrow from the crypto exchange as long as he agreed to keep it filled.
Sadly, Ver’s account went negative, and he failed to fill it. After failing to meet his obligations, CoinFLEX put Ver’s account in default. The crypto evangelist now owes the company 47 million USDC.
Ver has also hit back at Lamb and CoinFLEX. In a tweet, the crypto evangelist denied rumours of him defaulting on crypto payments to any counterparty. Although Ver didn’t name Lamb or CoinFLEX, the Bitcoin Cash proponent went as far as claiming that he was the aggrieved party who was owed.
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
Following a short back and forth, both parties appear to have taken their dispute off social media.
CoinFLEX’s Efforts to Bounce Back
Despite the negative press that has emerged from this, CoinFLEX has been working on getting back on its feet. Days after suspending withdrawals, the exchange shared a recovery plan that includes issuing Recovery Value USD (rvUSD) – a company-built token worth $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
According to CoinFLEX, they will issue rvUSD to “sophisticated investors” at a $10,000 subscription rate. Investments will carry a 20% annual percentage yield, which they will pay in rvUSD.
Besides the recovery token, Lamb and co-founder Sudhu Arumugam announced earlier this month that they had begun arbitration procedures in Hong Kong in hopes of regaining $84 million in losses.
The action will be taken against a specific “individual” – most likely Ver – who CoinFLEX claims had deliberately defaulted on his obligation to make payments to the broker. However, the company noted that receiving a judgment in Hong Kong could take up to a year.
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