Withdrawals are not likely to resume Thursday

Bitcoin and other cryptocurrencies are in free fall.

Dan Kitwood | Getty Images

Chief Executive Officer Mark Lamb said Wednesday that crypto exchange CoinFlex will likely not be able to allow customers to withdraw funds again on Thursday as originally scheduled.

“We will need more time. It is unlikely that withdrawals will be re-enabled tomorrow,” Lamb told CNBC.

However, CoinFlex is in talks with several large funds interested in buying the $47 million in debt it allegedly owes to investor Roger Ver, Lamb added.

CoinFlex is the latest victim of the cryptocurrency price crash that saw billions of dollars wiped off the market in the recent “crypto winter.” Bitcoin has lost more than 50% of its value this year and is down nearly 70% from its all-time peak last November, while Ether is down 70% this year and more than 75% from its peak.

Cryptocurrency exchange Withdrawals suspended for customers last week Citing “harsh market conditions,” he said an individual investor owed her about $47 million. Initially, CoinFlex did not name the client, but on Tuesday, the name Lamb He claimed that the investor was Roger VerDubbed “Bitcoin Jesus” due to his evangelical views on cryptocurrencies in the early days of the industry.

Ver denied that he owed CoinFlex money. Ver was not immediately available to comment on this story when contacted by CNBC.

CoinFlex claims that Ver’s account has entered into “negative capital”. Usually, the exchange liquidates the investor’s position in this case. The exchange said Veer had a certain agreement meaning this did not happen.

To fix the $47 million gap on CoinFlex’s balance sheet, the company is issuing a token called Recovery Value USD, or rvUSD, enticing investors with a 20% interest rate to hold the virtual currency. Lamb said that the ability to pay that interest rate would come from the refund from Ver in addition to the “financing fees” that were charged to it.

“We don’t know what will happen next if he doesn’t pay or if he does, our focus right now is…getting…to raise that money,” Lamb said.

He added that he was confident that “this recovery will happen one way or another.”

Lamb said the company is talking to several funds that buy distressed corporate debt, which will likely buy the entire $47 million.

“The good news is that the number of players who have reached out to those interested in this debt offering and this premium offering is very well funded,” Lamb said, adding that some of the funds contacted had more than $10 billion. in assets under management.

Lamb said some of the inquiries came from traditional funds rather than crypto-focused ones, but declined to name any.

“We’re talking about tens of millions (of dollars). It comes from a mix of distressed debt funds, existing users of the platform, and investors in CoinFlex,” Lamb told CNBC.

Disagreement between CoinFlex and ‘Bitcoin Jesus’

The feud between Lamb and Ver represents the latest saga in the crypto market amid a slump in cryptocurrency prices.

Lamb said this week that Fair received a notice of default. The CoinFlex CEO told CNBC that the goal is to “continue talking to him (Ver) and resolve this issue amicably.” However, Lamb said there are other avenues for legal asylum.

“We also have an obligation to go through the appropriate legal channels,” he said.

The agreement between CoinFlex and Ver means that if an investor fails to meet a margin call, their positions will not be automatically liquidated as is usually the case.

A margin call is a situation in which an investor must allocate more funds to avoid losses in a transaction made using borrowed money.

Lamb said CoinFlex felt comfortable entering into such an agreement due to “the data we’ve seen on capitalization.”

But Lamb said CoinFlex will now cancel such agreements.

“In hindsight, it would have been better not to have no-liquidation agreements,” Lamb said.

Leave a Reply

Your email address will not be published. Required fields are marked *