According to CoinFLEX, it will take up to 12 months to fully recover the deficit. Currently, while seeking arbitration, CoinFLEX is also trying to fix the problem and looking to raise funds from its investors.
Crypto exchange CoinFLEX has entered the process of arbitration in Hong Kong to reclaim $84 million in funds it lost as a result of a ‘large individual customer’ failing to recover debts owed to the company.
According to the announcement made by CoinFLEX co-founders Sudhu Arumugam and Mark Lamb, its deficit was initially $47 million. However, it increased to $84 million after liquidating the customer’s FLEX coin positions.
How did it all happen? A large individual customer (who is allegedly a prominent Bitcoin supporter and promoter Roger Ver) had a written manual margin arrangement with CoinFLEX. When his margin ratio went below the company’s minimum requirements, he failed to honor a contract with CoinFLEX that required him to guarantee any negative equity on his account.
$84 million is a significant amount, and it will take up to 12 months to fully recover the deficit. As per CoinFLEX, the company tried to liquidate the individual’s account in a ‘prudent manner’, keeping him fully informed about the process. However, the individual was ‘wasting time’ by promising to replenish his account with funds that never arrived.
“We have commenced arbitration in HKIAC for the recovery of this $84m as the individual had a legal obligation under the agreement to pay and has refused to do so. His liability to pay is a personal liability which means the individual is personally liable to pay the total amount, so our lawyers are very confident that we can enforce the award against him.”
As a result of the default, the FLEX coin has suffered a loss in price. Since the end of June, it has fallen over 93% in price. Currently, it is trading at $0.27.
Notably, Roger Ver himself is denying that he owes any money to CoinFLEX. Besides, he said that it is CoinFLEX that owes money to him. He took to Twitter to comment on the case:
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
Currently, while seeking arbitration, CoinFLEX is also trying to fix the problem and looking to raise funds from its investors. In addition, the company is in talks with its depositors who are looking to help the business by rolling some of their deposits into equity. As CoinFLEX has said, there are a number of investors in this group of large depositors who have indicated that they may help the company recover and move forward.
Meanwhile, the company is looking for some temporary liquidity for CoinFLEX depositors. Next week, CoinFLEX hopes to make 10% of customers’ balances available for withdrawal.