CoinFLEX Starts Arbitration To Recover $84M From Individual Customer

CoinFLEX starts arbitration to recover $84 million from a large individual customer and also announced that it plans to make 10% of the customers’ funds available for withdrawal so let’s have a closer look at today’s cryptocurrency news.

Trading platform CoinFLEX starts the arbitration process to combat the company’s liqudity crisis which prevented users from withdrawing funds for three weeks. Co-founder Sudhu Arumugam and Mark Lamb announced that the company entered arbitration to recover $84 million in losses from the larger individual customer who was previously claimed to be a prominent BTC evangelist Roger Ver. The customer in question defaulted on a huge position last month and failed to honor a contract with the exchange requiring him to guarantee negative equity on his account. CoinFLEX stated in the past that it was the single customers’ failure to cover the debt that forced the company to stop withdrawals from the platforms in June.

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

Arumugam and Lamb stated they expect a verdict in the arbitration case to take up to a year and because the liability in question is personal, the two strongly believe the case will result in recuperation for CoinFlex:

 “The individual is personally liable to pay the total amount, so our lawyers are very confident that we can enforce the award against him.”

The latest blog post didn’t refer Ver by name, Lamb stated that Ver is actually a Bitcoin adopter and an advocate known as Bitcoin Jesus so he shortly denied the allegations and claimed that rather than Coinflex owed him money. CoinFLEX claimed that the deficit stemming from the losses Ver got acquired was $47 million but Arumugam and Lamb updated this amount to $84 million. Arumugam and Lamb liquidated Ver’s massive positions and the company’s CoinFLEX token losses doubled. Flex crashed by 66% in value right before the withdrawal freeze.

Ver’s alleged default ended up stressing the company twice and forced the paltform to perform a withdrawal freeze and then incur huge losses when the massive FLEX positions were sold off to cover the losses. According to CoinFlex, the two parties were in constant communication but Ver failed to follow through on the promises and pay the collateral which is why the exchange entered into arbitration:

“Throughout the process, we kept the individual fully informed and he had cooperated with us and promised to pay or increase collateral to cover the shortfall but at the end, the promise proved empty.”

In addition to announcing the case, the company said that next week it will make up to 10% of the customer’s balances available for withdrawal which will require the platform to sell all non-native assets locked on the platform into USDC.