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- The crypto trading platform is taking legal action against one of its top individual customers to recover an $84 million loss.
- The firm also plans to allow its customers to withdraw 10 percent of their funds by next week.
Crypto trading platform, CoinFLEX, has shared its plans to get out of its present liquidity issues. The company suspended funds withdrawals from its platform for nearly three weeks. The firm’s co-founders (Sudhu Arumugam and Mark Lamb) issued a joint statement via the company’s blog on Saturday.
According to the blog post, CoinFLEX has opened a legal claim against a “top individual client” in a Hong Kong court. The court case is to recover this customer’s $84 million loss. While the blog post didn’t reveal the customer’s identity, it is likely roger Ver is the undisclosed identity in the blog post.
Last month, CoinFLEX claimed that famous Bitcoin advocate, Ver, was indebted to them. CoinFLEX explained that the unidentified person defaulted on a massive position in June. However, he didn’t fulfill the terms of his CoinFLEX agreement that requires that he ‘guarantees’ any equity loss on his CoinFLEX account.
A previous statement by CoinFLEX claims that this customer’s failure to honor this contract was why the trading platform had to suspend withdrawals last month. The CoinFLEX co-founders admitted that they wouldn’t mind the period it would take for the court to give a verdict on the matter. They also predict that the court might not reach a final judgment until next year.
Their reason was that the liability in this matter is a personality type. However, the co-founders are optimistic that CoinFLEX would recoup nearly all the $84 million. “The person in question is legally bound to make this payment. Hence, our lawyers are optimistic that they will enforce his repayment through the court.” While the blog post didn’t mention Ver’s name, lamb later came out straight that Ver is the name of the undisclosed identity.
Allegations and counter-allegations
Ver (also known as Bitcoin Jesus) was one of the early Bitcoin adopters and remained a long-term Bitcoin bull. Almost immediately after lamb mentioned Ver’s name as the debtor, “Bitcoin Jesus” denied the claims. Instead, he claimed that the reverse was the case – CoinFLEX is indebted to him.
The CoinFLEX co-founders explained why there is a difference in the previously quoted debt amount ($47 million) and the newly quoted ($84 million) that Ver owed CoinFLEX. They explained that CoinFLEX”s losses increased nearly 100 percent when the company liquidated Ver’s huge positions on its native token (FLEX). Coinmarketcap data shows that FLEX has dropped about 66 percent in value since the withdrawal freeze announcement on June 23.
Ver’s supposed default affected the CoinFLEX in two ways. The company had to sell off its substantial FLEX positions to cover the losses. Also, the company had no choice but to suspend withdrawals. The crypto trading platform claimed that both parties have constantly communicated for weeks. However, Ver has consistently failed to keep his promises of paying the collateral. Hence, the need CoinFLEX had to seek the legal route.
Moving forward
Nevertheless, CoinFLEX announced that its customers should be able to withdraw at least 10 percent of their funds beginning next week. However, the company can’t fulfill withdrawals without converting all the non-native assets on the platform to USDC.
Also, CoinFLEX would need to suspend all trading activities and shut any futures positions. The firm disclosed that it is in talks with some of its whale customers to convert their deposits to equity. Also, it plans to raise more funds through venture capitalists.
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