CoinFlex CEO: Restoring Withdrawals Could Take More Time Than Expected

Crypto derivatives exchange CoinFlex is unlikely to restore withdrawal services on its platform on Thursday as promised by CEO Mark Lamb on Monday. Speaking to CNBC, Lamb clarified that the company needs more time to fix the liquidity crisis arising out of a $47-million negative equity of a customer – Roger Ver. 

“We will need more time. And it’s unlikely that withdrawals will be re-enabled tomorrow,” a CNBC report quoted Lamb as saying.

On June 23, CoinFlex paused withdrawals and FLEX Coin trading, citing extreme market conditions and uncertainty involving a counterparty. In a blog, Lamb had mentioned June 30 as the estimated date for the restoration of withdrawals.  

Recovery Value Token – rvUSD

In an update on June 27, Lamb elaborated on the problems that the exchange was facing and steps being taken to address them. 

Without naming anyone, he said a long-term customer’s account went into negative equity, causing the exchange to halt withdrawals. Since the individual had a non-liquidation recourse account, the company couldn’t auto-liquidate the position.  

“As a solution toward re-enabling withdrawals, CoinFLEX is planning to monetize this personal guarantee by creating a corresponding liability in the form of a token called Recovery Value USD (“rvUSD”),” he announced.   

Lamb-Roger Ver Twitter Spat

Till this stage, the size of negative equity or the individual who owed it was not known. On June 28, a spat broke out between CoinFlex CEO and the counterparty – Roger Ver – on Twitter.  

It began with a tweet from Ver who said, “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.” 

CoinFlex’s CEO hit back with a series of tweets in which he elaborated that his exchange had a written contract with Roger Ver, and it has served him a notice of default. 

“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,” one of Lamb’s tweets said. 

Focus on Raising Fund

In the interview with CNBC, Lamb clarified that his focus right now is to raise the funds and restore withdrawals.

“The good news is that the number of players that have reached out that are interested in this debt offering and this token offering are extremely well capitalized,” Lamb said. 

The novel recovery stablecoin rvUSD is available to high-income and high-net-worth investors from non-US jurisdictions, and it promises a 20% interest rate.   

Expressing confidence that recovery is going to happen, Lamb said CoinFlex will leverage “recouping the funds from Ver plus a financing charge that has been imposed on him” to pay the interest on rvUSD.