Crypto Exchange CoinFlex is now seeking to recoup $ 84 million
(Bloomberg) – CoinFlex said it has taken legal action to recover $ 84 million in losses from a single customer and is in talks to sign a joint venture with another cryptocurrency exchange in an attempt to revive the fortune.
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The crypto exchange stopped withdrawing on its platform last month after a counterparty, which it later identified as longtime crypto investor Roger Ver, failed to repay $ 47 million from a margin call.
CoinFlex said in a blog post on Saturday that the total debt to the investor has since risen after calculating a final overview of losses from “significant” positions in the stock exchange’s original FLEX token. The blog post did not mention Ver by name.
“The person first asked us to liquidate his account, but then went on to tell us for a long time afterwards that he wanted to send significant funds to the stock exchange to take physical delivery of the futures positions,” CoinFlex co-founders Sudhu Arumugam and Mark wrote Lamb in the post Saturday. . “It is clear to us now that he was wasting time and hoping for a bounce in the market that never materialized.”
The couple said that CoinFlex had started an arbitration case in Hong Kong to get back 84 million dollars, a process that they expect can take about 12 months before a verdict is handed down.
Ver, who was nicknamed “Bitcoin Jesus” for his early investment in crypto, declined to comment. He told Bloomberg last month that he had no outstanding debt with CoinFlex. In a tweet on June 28, he said that an unidentified counterparty owed him “a significant amount of money”.
CoinFlex is one of several cryptocurrencies struggling to operate in the midst of a major market downturn that has wiped out around $ 2 trillion of the total value of cryptocurrencies, and several players have suspended withdrawals or filed for bankruptcy. The crisis has revealed a network of infection across the sector, where one company’s failure causes a domino effect across many others.
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A plan to provide enough external funding in the USDC – a stable currency linked to the value of the US dollar – to cover the lack of liquidity and resume withdrawals is underway, Sudhu and Lamb said in the blog post. This includes asking some customers if they can help the business by “rolling some of their deposits into equity.”
CoinFlex is also in discussions with “a major US stock exchange” about entering into a joint venture once the financing process is complete, they said. The resulting agreement will lead the other exchange to use CoinFlex’s platform to offer access to the US stock repo market and deliverable perpetual futures, first through offshore licenses before migrating to the US.
At the moment, CoinFlex will try to make 10% of customer balances available for withdrawal within a week, Sudhu and Lamb added.
“This is not a position we ever imagined we would be in,” they wrote in the post.
CoinFlex was founded in 2019 and is a small crypto exchange focusing on derivatives trading. It had around $ 145 million in total value locked on the platform on Saturday.
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