Problematic crypto exchange CoinFLEX It has been confirmed that a lawsuit has been filed in Hong Kong to recover $ 84 million from Bitcoin Cash (BCH) proponent Roger Ver.
On June 24, the company announced that it had suspended withdrawals and suspended permanent and spot trading due to “extreme market conditions” and “continuation of trading partner uncertainty.” The News We couldn’t provide the details of the counterparty, but it wasn’t 3AC.
Ver was later “going out” on social media as a counterparty in the heart of the storm.
CoinFLEX argued that the financial black hole it is currently facing was due to Ver’s refusal to pay its margin trading debt. Normally, if the value of a margin trader’s account falls below a certain level, the open position will be closed automatically to prevent further losses.
However, in this case, CoinFLEX stated that it had an agreement with Ver backed by a “strict personal guarantee”. This means that the exchange will not close his losing trade.
In a recent update on the situation, Ver said his legal team advised him not to talk further about this issue. However, he repeated a previous statement that he did not borrow money from CoinFLEX. Instead, he claims that the embarrassed exchange owe him money.
CoinFLEX is looking for an investment
Co-founder of CoinFLEX Sudhu Arumugam and Mark Lamb The user apologized that this situation was not what the user “expected”.
They also apologized for the lack of updates since the withdrawal was frozen. Explain that this is due to an ongoing nondisclosure agreement on investment negotiations. The pair also said the company aims to pass on some customer deposits to the company’s stock as an additional source of funding.
“We are aiming to raise a significant amount of money from new investors, and we are in talks with CoinFLEX depositors who are trying to support their business by passing some of their deposits to equity. “
The company initially estimated a financial black hole of $ 47 million. However, the latest update states that it incurred additional costs and eventually cost $ 84 million. They are currently seeking Ver from the proceedings.
The cost almost doubled as a result of the guarantee that Ver will replenish your account. However, those funds never arrived and left the position open, causing further losses.
When it became clear that Ver was “wasting time”, CoinFLEX liquidated the account in hopes of a never-ending market bounce, but doing so incurred high slippage costs.
“We carefully tried to clear his account using the exchange counterparts, but the position was so important that a large or series of large orders were reasonably created. So they were accompanied by a slip. “
The SmartBCH Foundation has that say
Another uncertainty in this situation lies in the SmartBCH sidechain where CoinFLEX maintains the bridge. SmartBCH users are concerned that if the exchange goes bankrupt, the value locked in the sidechain will be distributed first to the preferred creditors.
CoinFLEX has confirmed that it is discussing with a SmartBCH representative, but the bridge will remain closed until more details are available.
The SmartBCH Foundation contacted CryptoSlate by email and stated that CoinFLEX mishandled SmartBCH deposits as client funds. The organization confirmed that talks were underway, but they saidReserve the right to pursue all policies of conduct.. “
“”Unfairly, CoinFlex also locks up the BCH that backs up the bridge-wrapped sBCH, stating that these are the same as the client’s funds. “
To move this issue forward, the SmartBCH Foundation has asked CoinFLEX to hand over the bridge to the SmartBCH community. Tokens resulting from restructuring will be available in the sidechain and liquid distribution will only be available in BCH.
