Shalini Nagarajan

Co-founders of controversial (and bankrupt) crypto hedge fund Three Arrows Capital have been taken to task over allegedly promoting their new exchange OPNX without securing a local license in Dubai.



They were called out by the Virtual Assets Regulatory Authority (VARA) of Dubai for allegedly promoting their crypto exchange, OPNX, while not ensuring proper restrictions for local residents.



It appears VARA caught wind of OPNX soliciting and collecting personal data from the public in February, according to a <a href="https://www.vara.ae/en/#0" target="_blank" rel="noreferrer noopener">notice</a> published Tuesday. As a result, the regulator issued a cease and desist order to the founders last month.



&#8220;OPNX launched the exchange on opnx.com, providing VA Exchange services — a regulated activity under the VARA regime — without securing any regulatory licences, and as such operating in contravention of local laws,&#8221; VARA said.



Even after applying some restrictions, UAE residents still appeared to have access to OPNX’s promotions and marketing communication.&nbsp;



OPNX, short for Open Exchange, is the latest brainchild of 3AC co-founders Kyle Davies and Su Zhu, alongside the two founders of bankrupt exchange CoinFLEX. All four received the written reprimand from Dubai’s VARA, as well as OPNX CEO Leslie Lamb.



The founders claim that OPNX, which went live on April 4, has <a href="https://blockworks.co/newsletter/issue/31107461" target="_blank" rel="noreferrer noopener">raised $25 million in investment capital</a>. 



After their crypto hedge fund went bust in June last year, Davies and Zhu relocated from Singapore to Dubai, where they were reportedly looking to establish a new operational hub.



Leslie Lamb told Blockworks that OPNX was launched in Hong Kong, and the exchange had taken measures to prevent UAE residents from accessing and signing up for the site.



“To confirm, we have no Dubai or UAE customers and do full KYC on all users,” she told Blockworks in a LinkedIn message.



“We have responded and cooperated with VARA every step of the way and they have invited us to meet with them and discuss the requirements for applying for a VARA license.”



OPNX hopes to not only be a venue for trading crypto, but also crypto-related bankruptcy claims. There’s supposedly a $20 billion market for crypto claims out there that OPNX wants to tap.&nbsp;



Its focus is on bankrupt asset claims, allowing creditors to “unleash their locked claims directly into crypto or use them as margin capital,” according to its website.



The authority’s crackdown on OPNX reflects the trend of emirate regulators adopting a more rigorous stance towards cryptocurrencies amid efforts to establish the region as an industry hot spot.



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Dubai Reprimands 3AC Founders’ New Crypto Exchange

Katherine Ross

Mark Lamb, co-founder of CoinFLEX, posted an open letter to “Bitcoin Jesus” Roger Ver and Blockchain.com CEO Peter Smith.&nbsp;



The letter extends an “olive branch” to Ver and Smith to celebrate Lamb’s launch of Open Exchange, which is a claims exchange rebranded from CoinFLEX and co-founded by Su Zhu and Kyle Davies, formerly of the bankrupt Three Arrows Capital.&nbsp;



Zhu, in a tweet thread from February, <a href="https://twitter.com/zhusu/status/1623734703596486658" target="_blank" rel="noreferrer noopener">claimed</a> that he and Davies wanted to use the “pain” and “lessons” from the collapse of Three Arrows, which led them to Open Exchange.



Lamb and Ver have been locked in a <a href="https://blockworks.co/news/coinflex-ceo-files-default-notice-against-bitcoiner-roger-ver" target="_blank" rel="noreferrer noopener">feud</a> since Lamb initially accused Ver of owing CoinFLEX $47 million in USDC, a stablecoin, in June 2022. Ver pushed back against the claims, alleging that CoinFLEX <a href="https://twitter.com/rogerkver/status/1541822377461415936" target="_blank" rel="noreferrer noopener">owed</a> him “a substantial sum of money.”&nbsp;



In July of last year, CoinFLEX claimed that the sum owed to them by a single investor, identified by Lamb as Ver, totaled $84 million.&nbsp;



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">An Open Letter to <a href="https://twitter.com/rogerkver?ref_src=twsrc%5Etfw">@rogerkver</a> And <a href="https://twitter.com/OneMorePeter?ref_src=twsrc%5Etfw">@OneMorePeter</a> of <a href="https://twitter.com/blockchain?ref_src=twsrc%5Etfw">@blockchain</a>: A Pathway to Wholeness <a href="https://t.co/9tMDAlnjHS">pic.twitter.com/9tMDAlnjHS</a>&mdash; Mark Lamb 💪 (@MarkDavidLamb) <a href="https://twitter.com/MarkDavidLamb/status/1643334856540057603?ref_src=twsrc%5Etfw">April 4, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Lamb claimed that a “large individual customer” had a manual margin arrangement with CoinFLEX, which allowed for a grace period to offer more collateral instead of an automatic liquidation, which is what happened for the average user.&nbsp;



“The customer’s privilege came with a requirement that the customer personally indemnifies us for shortfalls in his account following the liquidation of his positions,” Lamb and co-founder Sudhu Arumugam <a href="https://coinflex.com/blog/coinflex-update-july-9-2022" target="_blank" rel="noreferrer noopener">wrote</a> in a blog post last July. 



Following the $84 million in losses, CoinFLEX filed for a restructuring in a Seychelles court last August, which was approved. From there, Lamb, Zhu and Davies joined forces to create OPNX from the bones of CoinFLEX.&nbsp;



The olive branch proposed by Lamb does not wipe the debts, however, as Lamb asked for a “payment plan.” He added “these ordinary people deserve a resolution.” OPNX is tokenizing rvUSD to allow them to achieve liquidity. The firm also offers markets for FTX claims.



As for Smith, Lamb is asking for Blockchain.com’s Cayman entity to return the three million FLEX ($5.9 million) owed to CoinFLEX in return for an equity stake in Open Exchange.&nbsp;



Blockchain.com, Lamb and Ver did not immediately respond to Blockworks request for comment.&nbsp;



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CoinFLEX CEO Offers ‘Olive Branch’ to Roger Ver Over $84M Debt

CoinFLEX is <a href="https://coinflex.com/blog/coinflex-update-january-16-2023/">justifying</a> its new potential venture “GTX” with Three Arrows Capital (3AC), saying the plans represent an evolution of its own goals.



A <a href="https://www.docdroid.net/7k8oW7r/gtx-pdf">pitch deck</a> leaked on Jan. 16 showed CoinFLEX plans to team up with 3AC co-founders Kyle Davies and Su Zhu to create a new crypto exchange.&nbsp;



They expect it to be a place where creditors of insolvent firms like FTX would be able to trade their claims. Users will have the ability to transfer their claims to GTX and immediately receive a credit via a new token called USDG.



In the pitch deck, GTX estimates a $20 billion market for its product, based on the notional value of crypto claims. The team is looking to raise $25 million for the exchange, and is eyeing a launch before the end of February.



It intends to “fill the power vacuum” left by FTX, to become the go-to marketplace for crypto claims within two to three months of its launch.



The name GTX, a play on fallen crypto exchange FTX, is currently a placeholder and will be changed eventually. It was chosen because “G comes after F,” one <a href="https://twitter.com/CryptoDuck_TH/status/1615163817692139520/photo/1">slide</a> shows.



CoinFLEX CEO Mark Lamb will remain as CEO and co-founder Sudhu Arumugam will stay on the management team. The team also includes other CoinFLEX executives Kent Deng, Leslie Lamb (who is married to Mark Lamb) and Ewelina Mielecka.



CoinFLEX said it will provide further details once it has managed to secure fundraising or an established partnership.&nbsp;



<h3 class="wp-block-heading">GTX attracts controversy</h3>



The planned venture has triggered some criticism from the crypto community. Reddit users pointed out flaws in the idea, with one Redditor saying, “basically the idea is to let people trade on the platform by promising funds from another platform that is in bankruptcy proceedings?”



Wintermute CEO Evgeny Gaevoy <a href="https://twitter.com/EvgenyGaevoy/status/1614984548886155271">hinted</a> on Twitter that he didn’t want his firm, one of the largest crypto makers, to be associated with anyone invested in the CoinGlex/3AC venture.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">And since we are talking about cancelling stuff, if you are investing into coinflex/3ac &quot;exchange&quot; you might find it a bit more difficult to work with wintermute in future (on the relationship building side)&mdash; wishful cynic (@EvgenyGaevoy) <a href="https://twitter.com/EvgenyGaevoy/status/1614984548886155271?ref_src=twsrc%5Etfw">January 16, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Meanwhile, Ripple’s former director of engineering Nik Bougalis <a href="https://twitter.com/nbougalis/status/1615024369289564160">said</a> Zhu and Davies are “trying to steal more money.”&nbsp;



<blockquote class="wp-block-quote">
“Anyone that gives these irredeemable scammers a single red cent to help fund this new exchange, will only be exposing themselves as a consciously bad actor,” Bougalis added.
</blockquote>



Matthew Liu, co-founder of Origin Protocol, however, <a href="https://twitter.com/matthewliu/status/1615148375422431232">commended</a> the concept, adding that he favored “people getting back on the horse after they’ve taken a fall.”



<h3 class="wp-block-heading">Both firms had a rough 2022</h3>



3AC blew up last year after <a href="https://blockworks.co/news/genesis-reveals-exposure-to-bankrupt-three-arrows-capital">defaulting</a> on a $2.4 billion loan from crypto lender Genesis. Its bankruptcy triggered a downward spiral for several crypto participants, since it had a long list of counterparties. Zhu and Davies have allegedly not been cooperating on asset disclosures with liquidators, and they have not been open about their whereabouts. But liquidators <a href="https://blockworks.co/news/3ac-liquidators-file-yacht-claim">believe they may either be in Bali or Dubai</a>.



CoinFlex itself <a href="https://blockworks.co/news/after-months-of-issues-troubled-exchange-coinflexs-restructuring-poised-to-pass">filed for restructuring</a> in Seychelles last year after a single client failed to meet a margin call. It also raised eyebrows after announcing it would try to raise missing funds by <a href="https://blockworks.co/news/coinflex-plans-to-raise-missing-funds-with-new-token">issuing a new token</a> with a 20% yield.



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CoinFLEX Defends Controversial ‘GTX’ Venture with 3AC Founders

Casey Wagner

<div id="highlights-block_6331d633900ae" class="highlights">
 <ul>
 <li>CoinFLEX paused withdrawals in June after a single client failed to meet a margin call, the exchange said</li>
 <li>Fewer than one million tokens have been allocated to vetoing the plan</li>
 </ul>
 
</div>



Months after unveiling its $47 million recovery token plans, <a href="https://cms.blockworks.co/crypto-exchange-coinflex-limits-withdrawals-keeps-most-assets-locked/" target="_blank" rel="noreferrer noopener">troubled</a> crypto exchange CoinFLEX is winning community support for its latest plan to save the company. 



CoinFLEX’s restructuring plan would give creditors 65% ownership. Existing ordinary and Series A shareholders will lose equity. Series B investors will continue to be shareholders, and 15% of the company will be reserved for an employee option plan that will vest overtime, CoinFLEX said in the <a href="https://coinflex.com/blog/coinflex-restructuring-proposal-and-next-steps/" target="_blank" rel="noreferrer noopener">proposal</a>. 



Creditors will receive CoinFLEX recovery tokens, rvUSD, equity and FLEX coin, the company said.&nbsp;



In June, a week after halting withdrawals due to an unnamed counterparty’s unmet margin call, the exchange announced that it was attempting to raise missing funds by issuing a new token, <a href="https://cms.blockworks.co/coinflex-plans-to-raise-missing-funds-with-new-token/" target="_blank" rel="noreferrer noopener">rvUSD</a>, that will earn a 20% yield. 



“We’re turning a problem into an opportunity,” CEO Mark Lamb said at the time.



Since voting began Sunday, the restructuring plan has won approval from 96 million CoinFLEX vote tokens, according to <a href="https://snapshot.org/#/coinflexvote.eth/proposal/0x7e28e921369007b8b508d01c04d84a99dcbc5eac6b44cfe01d995ce933401d4e" target="_blank" rel="noreferrer noopener">Snapshot</a>. Fewer than one million tokens have been allocated to vetoing the plan. The voting period ends Tuesday, Sept. 27 at 4:00 am UTC. 



The voting period comes a month after the exchange filed for restructuring in the Seychelles.&nbsp;



If the plan moves forward under the current proposal, CoinFLEX will be keeping $10 million, the <a href="https://cfv2-media.s3.ap-northeast-1.amazonaws.com/media/pdf/Term_Sheet_and_Exhibits.pdf" target="_blank" rel="noreferrer noopener">term sheet</a> for the restructuring plan notes, an amount the team says will be crucial to move recovery efforts forward.



“The 10M isn&#8217;t only for the company&#8217;s operations, it&#8217;s also funding legal expenses related to rvUSD,” Lamb said in the CoinFLEX community Telegram group. “rvUSD would be significantly less valuable if that trust did not have meaningful backing behind it.”&nbsp;



In terms of the plan being a done deal, Lamb was cautiously optimistic when speaking to token holders.



“I’m holding my breath,” he said in a Telegram message. “But it certainly feels that way, yes.”



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After Months of Issues, Troubled Exchange CoinFLEX’s Restructuring Poised to Pass

Sebastian Sinclair

<div id="highlights-block_62d0a39850372" class="highlights">
 <ul>
 <li>Following a three week shutdown, CoinFLEX said it was opening limited withdrawals to the tune of 10%</li>
 <li>Certain derivatives contracts and open positions on the platform will be closed until further notice</li>
 </ul>
 
</div>



Embattled crypto exchange CoinFLEX said Thursday it has decided to open withdrawals from its platform, albeit under severely limited terms, three weeks after halting the ability to do so.



Users will now be able to withdraw their funds to the tune of 10% with the exception of flexUSD — the exchange&#8217;s interest-bearing stablecoin — which cannot be withdrawn until further notice, <a href="https://coinflex.com/blog/update-july-14-2022/" target="_blank" rel="noreferrer noopener">CoinFLEX said</a>.



The exchange joins a host of other troubled crypto businesses, including <a href="https://cms.blockworks.co/celsius-to-file-for-bankruptcy-imminently-report/" target="_blank" rel="noreferrer noopener">lenders</a> and <a href="https://cms.blockworks.co/coinbase-cut-workforce-ceo-wary-of-potential-recession/" target="_blank" rel="noreferrer noopener">exchanges</a>, in their attempts to wade through the fall out resulting from a liquidity crunch and extreme market volatlity.



Last month, CoinFLEX <a href="https://cms.blockworks.co/coinflex-halts-withdrawals-citing-uncertainty-around-unnamed-counterparty/" target="_blank" rel="noreferrer noopener">suspended all withdrawals</a> from its platform citing &#8220;extreme market conditions&#8221; and continued uncertainty involving an unnamed counterparty for its reasoning. That counterparty was later alleged by CoinFLEX&#8217;s chief to be Roger Ver, early bitcoin adopter and CEO of Bitcoin.com.



Ver, sometimes referred to as &#8220;Bitcoin Jesus,&#8221; was accused by CoinFLEX&#8217;s CEO Mark Lamb of owing the exchange <a href="https://cms.blockworks.co/coinflex-ceo-files-default-notice-against-bitcoiner-roger-ver/" target="_blank" rel="noreferrer noopener">$47 million</a> late last month. Ver, who has denied the claims on more than one account, was accused roughly two weeks later by Lamb of owing more than <a href="https://cms.blockworks.co/coinflex-takes-legal-action-to-recover-84m-from-single-customer/" target="_blank" rel="noreferrer noopener">$84 million</a> following calculations of Ver&#8217;s final “significant” losses in the exchange’s native FLEX token.



Before final calculations of Ver&#8217;s alleged unmet margin call were made, Lamb claimed he was attempting to turn a &#8220;<a href="https://cms.blockworks.co/coinflex-plans-to-raise-missing-funds-with-new-token/" target="_blank" rel="noreferrer noopener">problem into an opportunity</a>&#8221; by issuing a new token in the hopes of recovering the $47 million shortfall.



Ahead of limits being lifted, CoinFLEX said in its update to users that it would cancel all current pending withdrawals and return all funds to their respective account balances.



<blockquote class="wp-block-quote">&#8220;We truly apologize for the trauma this situation has caused the CoinFLEX community,&#8221; the exchange&#8217;s founders <a href="https://coinflex.us/support/coinflex-update-july-9-2022/" target="_blank" rel="noreferrer noopener">wrote</a> last week. &#8220;It is understandable that you vent your frustration at us and continue to do so when you feel we have not been communicative enough. One of the main reasons for our lack of responsiveness in the last two weeks is that we have been looking for companies/partners to invest in CoinFLEX.&#8221;</blockquote>



Users&#8217; subaccounts, used for the purpose of derivatives trading and other activities, will also be rolled into their main accounts. Certain open perpetual contract positions will require liquidation when the FLEX/PERP price is updated resulting in a subset of these accounts falling into negative equity, the exchange said.



&#8220;To protect other creditors on the platform, we must merge the balances and positions in all subaccounts with their respective main accounts,&#8221; CoinFLEX wrote. FlexUSD will no longer hold short perpetual positions and therefore holders will not earn any interest &#8220;for the time being.&#8221;



The exchange also said it was attempting to resolve its issues with the future possibility of enabling further withdrawals while seeking out a potential acquisition from equity investors. Further updates on its next course of action are expected by the end of next week.



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Crypto Exchange CoinFLEX Limits Withdrawals, Keeps Most Assets Locked

<div id="highlights-block_62cbc50f15e17" class="highlights">
 <ul>
 <li>After serving former Bitcoin.com CEO Roger Ver with a notice of default, CoinFLEX now plans legal action</li>
 <li>The arbitration process in Hong Kong is expected to take 12 months before judgment is reached</li>
 </ul>
 
</div>



Crypto exchange CoinFLEX is seeking to recover $84 million from a single customer and is in talks with another US exchange to enter a joint venture to revive its business.



In late June, CoinFlex said a counterparty owed the exchange $47 million and it was forced to halt withdrawals. CEO Mark Lamb <a href="https://twitter.com/MarkDavidLamb/status/1541831697787928576" target="_blank" rel="noreferrer noopener">identified</a> the counterparty as Roger Ver, former CEO of wallet provider Bitcoin.com, and said he has been issued a notice of default.



After calculating the investor’s final “significant” losses in the exchange’s FLEX token, the total owed by the investor has now nearly doubled, co-founders ​​Sudhu Arumugam and Mark Lamb wrote in a <a href="https://coinflex.com/blog/coinflex-update-july-9-2022/" target="_blank" rel="noreferrer noopener">blog post</a> on Saturday.



“The individual first asked us to liquidate his account, but then continued to tell us for some considerable time afterward that he wanted to send significant funds to the exchange to take physical delivery of the futures positions,” they wrote. “It is clear to us now that he was wasting time and hoping for a bounce in the market that never materialized.”



The investor had cooperated and promised to pay or increase collateral to cover the shortfall, but that didn’t work out, they added.



CoinFLEX has begun arbitration proceedings in Hong Kong to recover the $84 million “as the individual had a legal obligation under the agreement to pay and has refused to do so,” they wrote. The legal process is expected to take about a year before a judgment is reached.&nbsp;



Ver, who became known as “<a href="https://www.investopedia.com/tech/who-roger-ver-bitcoin-jesus/" target="_blank" rel="noreferrer noopener">Bitcoin Jesus</a>” for his evangelism of the cryptoasset, addressed speculation that he defaulted on debt to a counterparty in a June 28 <a href="https://twitter.com/rogerkver/status/1541822377461415936" target="_blank" rel="noreferrer noopener">tweet</a>, alleging that the company owes him instead. He didn’t return Blockworks’ request for comment by press time. Last month, he <a href="https://cms.blockworks.co/coinflex-ceo-files-default-notice-against-bitcoiner-roger-ver/" target="_blank" rel="noreferrer noopener">told Blockworks</a> via Telegram that he stood behind his tweet and that his lawyers would issue a statement soon.&nbsp;



While the legal proceedings take place, CoinFLEX said it plans to raise funds from investors in the form of stablecoin USDC. Depositors will also be asked if they want to help the business by “rolling some of their deposits into equity.”



The exchange’s <a href="https://cms.blockworks.co/coinflex-plans-to-raise-missing-funds-with-new-token/" target="_blank" rel="noreferrer noopener">new token</a> — Recovery Value USD (rvUSD) — will be used to improve liquidity in the original or modified format, the co-founders said. It also seeks to make 10% of balances available for withdrawal within a week.



The new token’s future value is predicated on successful recovery of funds from Ver, according to the company’s <a href="https://cfv2-media.s3.ap-northeast-1.amazonaws.com/media/pdf/rvUSD_Whitepaper.pdf" target="_blank" rel="noreferrer noopener">three-page white paper</a>.



CoinFLEX, registered in 2019 in Seychelles, is a derivates exchange that allows users to earn interest by holding its stablecoin flexUSD.



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CoinFLEX Takes Legal Action To Recover $84M From Single Customer

Bessie Liu

<div id="highlights-block_62bcc63f483e7" class="highlights">
 <ul>
 <li>After failing to receive $47 million in USDC funds from ​​“Bitcoin Jesus,” CoinFLEX has turned toward a “recovery” token</li>
 <li>Recovery Value USD (rvUSD) will offer a 20% annual return for holders</li>
 </ul>
 
</div>



After CoinFLEX’s chief executive accused early Bitcoin adopter Roger Ver of owing the company $47 million in the stablecoin USDC, the head of the exchange told Blockworks he’s shifted to focus on recovering the funds he says are owed.&nbsp;



CEO Mark Lamb <a href="https://twitter.com/MarkDavidLamb/status/1541831697787928576" target="_blank" rel="noreferrer noopener">tweeted</a> Tuesday that Ver — who is well-known for backing growing Bitcoin-focused startups — has been a longtime customer and <a href="https://cms.blockworks.co/coinflex-ceo-confirms-roger-ver-owes-the-company-47m/" target="_blank" rel="noreferrer noopener">failed to meet</a> a recent margin call. 



Ver has denied the claims instead alleging the company owes him money.&nbsp;



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">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.&mdash; Roger Ver (@rogerkver) <a href="https://twitter.com/rogerkver/status/1541822377461415936?ref_src=twsrc%5Etfw">June 28, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Ver told Blockworks via Telegram he still stands behind his tweet posted on Tuesday and that a statement from his lawyers would be issued sometime on Thursday.



CoinFLEX, an exchange incorporated in the Republic of Seychelles, halted customer withdrawals of funds last week and issued a token named Recovery Value USD (rvUSD) that offers a 20% annual return in hopes of raising funds to stabilize the business. 



“We are still speaking to [Ver], and we have filed a default notice,” Lamb said.&nbsp;



<blockquote class="wp-block-quote">“We&#8217;ll do whatever it takes to get these funds back.”&nbsp;</blockquote>



Lamb is now speaking with a number of distressed debt funds and other institutional investors, saying “there is a large amount of precedent for these types of transactions.”



“Fast and swift transactions by this nature [are in] the best interest of our customers,” he said. “We want to get customers fully capitalized and withdraw their funds as quickly as possible,” Lamb said. “The amount of interest we&#8217;ve seen from that industry, debt credit and distressed debt is enormous. We are continuing to speak to various participants in that industry.”



Lamb and Ver first met some 10 ten years ago and have had what Lamb describes as a “personal recourse, non-liquidation relationship.”



The takeaway, from CoinFLEX’s perspective: the exchange is unable to get its lent money back and Ver is personally liable for any loans or assets he can’t repay soon.



Lamb declined to comment on whether the rvUSD token plan has been run by the <a href="https://fsaseychelles.sc/" target="_blank" rel="noreferrer noopener">Financial Services Authority Seychelles</a>.



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CoinFLEX CEO Files Default Notice Against Bitcoiner Roger Ver

<div id="highlights-block_62bb5c8981b98" class="highlights">
 <ul>
 <li>After halting withdrawals last week, CoinFLEX announced it would launch a new token to raise $47 million</li>
 <li>Ver denies that he is the debtor and says CoinFLEX owes him a substantial amount of money</li>
 </ul>
 
</div>



The chief executive of CoinFLEX alleged Tuesday that the former CEO of crypto trading platform and wallet provider <a href="http://bitcoin.com/" target="_blank" rel="noreferrer noopener">Bitcoin.com</a> owes the cryptocurrency exchange $47 million.



CoinFLEX CEO Mark Lamb <a href="https://twitter.com/MarkDavidLamb/status/1541831697787928576" target="_blank" rel="noreferrer noopener">tweeted</a> that Roger Ver, current executive chairman of Bitcoin.com, is a longtime customer and the counterparty whose outstanding debt forced the derivatives-focused exchange to halt withdrawals last week. The company on Monday moved to <a href="https://cms.blockworks.co/coinflex-plans-to-raise-missing-funds-with-new-token/" target="_blank" rel="noreferrer noopener">issue a new token</a>, rvUSD, to stabilize its balance sheet, with the goal of raising at least $47 million. 



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">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.&mdash; Mark Lamb 💪 (@MarkDavidLamb) <a href="https://twitter.com/MarkDavidLamb/status/1541831697787928576?ref_src=twsrc%5Etfw">June 28, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Lamb told Bloomberg rvUSD will have a 20% yield, and — if $47 million is raised — users would be able to withdraw their funds in full.&nbsp;



After being suspected as the debtor by the anonymous crypto market participant <a href="https://twitter.com/FatManTerra/status/1541778973511884802" target="_blank" rel="noreferrer noopener">FatManTerra</a>, Ver initially denied.



“Not only do I not have a debt to this counter party, but this counter party owes me a substantial amount of money,” Ver said at the time.&nbsp;



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">While the debtor is pasting scripted rebuttals from his lawyer and the creditor claims they&#39;re in convo to resolve it while launching a questionable &quot;product&quot; to fill the gap. Disgraceful.<a href="https://t.co/sbTYQ7c0Gt">https://t.co/sbTYQ7c0Gt</a> <a href="https://t.co/Oyo11lHOxD">pic.twitter.com/Oyo11lHOxD</a>&mdash; DeFiyst (@DeFiyst) <a href="https://twitter.com/DeFiyst/status/1541837986626768896?ref_src=twsrc%5Etfw">June 28, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



In defense of CoinFLEX, Lamb tweeted that “[Ver] is denying that the debt pertains to him and so we felt the need to clarify to the public that yes — the debt is 100% related to his account.”



He added that his company does not owe any debts to Ver, and that “his statement is blatantly false.”



Ver has been a proponent of a 2017 bitcoin fork, <a href="https://www.blockworksresearch.com/assets/bch/" target="_blank" rel="noreferrer noopener">Bitcoin Cash (BCH)</a>, which was later <a href="https://www.investopedia.com/terms/b/bitcoin-cash.asp" target="_blank" rel="noreferrer noopener">split again</a> into Bitcoin Cash ABC (remaining known as BCH) and Bitcoin Cash Satoshi&#8217;s Vision (BSV) the brainchild of <a href="https://cms.blockworks.co/?s=craig+wright" target="_blank" rel="noreferrer noopener">Craig Wright</a>. Despite neither fork being embraced by the market as the canonical bitcoin, they currently rank at number 32 and 49 by market cap, with the cryptoassets together worth about $3 billion, or about 0.7% the value of BTC.



As a bitcoin evangelist, Ver became known as “<a href="https://www.investopedia.com/tech/who-roger-ver-bitcoin-jesus/" target="_blank" rel="noreferrer noopener">Bitcoin Jesus</a>.” He renounced <a href="https://www.bloomberg.com/news/articles/2014-06-15/-bitcoin-jesus-calls-rich-to-tax-free-tropical-paradise" target="_blank" rel="noreferrer noopener">his US citizenship</a> in 2014, <a href="https://youtu.be/kApf5j-clzE?t=37" target="_blank" rel="noreferrer noopener">motivated in part</a> by his experience serving 10 months in federal prison for illegally selling explosives on eBay.



CoinFLEX and Ver did not immediately return requests for comment.



Correction: Roger Ver has served as the executive chairman of Bitcoin.com since Aug. 1, 2022. Dennis Jarvis is the current CEO. Updated June 29, 2022 at 9:00 am ET.



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Troubled Exchange CoinFLEX Confirms Bitcoin.com’s Executive Chairman Owes It $47M

<div id="highlights-block_62ba28f93922d" class="highlights">
 <ul>
 <li>CoinFLEX hopes to raise $47 million with a new token</li>
 <li>If all funds are raised, customers will be able to withdrawal in full</li>
 </ul>
 
</div>



Four days after suspending withdrawals following an unnamed counterparty’s unmet margin call, cryptocurrency exchange CoinFLEX will be issuing a new token with the hopes of raising $47 million.



“We’re turning a problem into an opportunity,” Mark Lamb, CEO of CoinFLEX said during an interview with Bloomberg Monday.&nbsp;



The token will have a 20% yield, and, if the full amount of $47 million is raised, all CoinFLEX users will be able to withdraw their funds in full, Lamb said.&nbsp;



“There’s other options being made available as well — we’re going to do everything possible to ensure that users funds are made whole and withdrawals enabled,” Lamb wrote in the exchange’s <a href="https://t.me/coinflex_EN" target="_blank" rel="noreferrer noopener">Telegram</a> chat following the interview. 



When asked if there were concerns about a run risk, Lamb said these would be unfounded.&nbsp;



“We’re not worried about that scenario because upon this fundraise being concluded, everyone can withdraw,” Lamb said. “We want everything to be matched, at all times.”&nbsp;



CoinFLEX announced on June 23 that the exchange was <a href="https://cms.blockworks.co/coinflex-halts-withdrawals-citing-uncertainty-around-unnamed-counterparty/" target="_blank" rel="noreferrer noopener">halting all withdrawals</a> and trading of its in-house FLEX token. 



“Due to extreme market conditions last week &amp; continued uncertainty involving a counterparty, today we are announcing that we are pausing all withdrawals,” the exchange <a href="https://coinflex.com/blog/coinflex-update-on-withdrawals/" target="_blank" rel="noreferrer noopener">wrote</a> at the time. “We fully expect to resume withdrawals in a better position as soon as possible.” 



The exchange will also pledge to make leveraged positions more transparent going forward, Lamb said.&nbsp;



“We will be making these positions public, we have an auditing firm we will be working with,” Lamb said. “This is much-needed data, there isn’t a single futures exchange in the world that makes these positions public.”&nbsp;



There’s a balance between transparency and privacy, though, Lamb noted. The exchange will not be revealing the identity of the unnamed counterparty with the unmet margin call at this time.&nbsp;



When asked if CoinFLEX might opt to sell in the event that the token issuance fails to raise the needed $47 million, Lamb responded that this was “possible,” but “we think the business is worth keeping.”&nbsp;



“Plus there’s significant interest in the token, so it’s definitely the best option,” he added.



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CoinFLEX Plans To Raise Missing Funds With New Token

Jocelyn Yang

<div id="highlights-block_62b98c3f4fa1a" class="highlights">
 <ul>
 <li>Celsius was one of the major players to shake the crypto world after it paused withdrawals, swaps and transfers between accounts</li>
 <li>The market contagion led more exchanges and banks to carry out emergency assessments based on the firms’ liquidity status</li>
 </ul>
 
</div>



Multiple cryptocurrency exchanges and lending platforms have announced halts on withdrawals in the past two weeks as markets across the world have grappled with bear territory.&nbsp;



Here’s a timeline outlining the exchanges and lending platforms that have faced liquidity pressure.&nbsp;



<h3 class="wp-block-heading">Week of June 13&nbsp;</h3>



Crypto lending platform <a href="https://cms.blockworks.co/celsius-lending-platform-suspends-withdrawals-and-transfers/" target="_blank" rel="noreferrer noopener">Celsius</a> was one of the major players that first shook the crypto world when it announced it would pause withdrawals, swaps and transfers between accounts on its platform due to “extreme market conditions” ahead of the Monday market open on June 13.&nbsp;



Market contagion set in; the next morning, <a href="https://twitter.com/binance/status/1536398693523501056?s=20&amp;t=52LiWVMEesEcbAb6O3vmoQ" target="_blank" rel="noreferrer noopener">Binance</a> paused bitcoin withdrawals for about three hours as the crypto exchange dealt with the impact of Celsius&#8217; move. Some crypto banks have also worked to publicly distance themselves from Celsius due to the crisis.&nbsp;



On Wednesday, more market volatility came after it was reported digital assets-focused hedge fund firm <a href="https://cms.blockworks.co/crypto-fund-three-arrows-capital-facing-potential-insolvency-report/" target="_blank" rel="noreferrer noopener">Three Arrows Capital (3AC) is facing potential insolvency</a> after a $400 million liquidation. The firm had already taken a major hit with Terra USD stablecoin’s <a href="https://cms.blockworks.co/?s=terra" target="_blank" rel="noreferrer noopener">collapse in May</a>, due to its substantial investment in LUNA.&nbsp;



On Thursday, <a href="https://cms.blockworks.co/finblox-imposes-withdrawal-limit-amid-3acs-uncertainty/" target="_blank" rel="noreferrer noopener">Finblox</a>, a Hong-Kong based crypto staking and yield generation platform which secured investment from 3AC, said it will impose a $1,500 monthly withdrawal limit and pause reward distribution amid 3AC’s uncertainty.&nbsp;



“This set of actions is a necessary move in such a highly volatile market and we believe should help us and our community to manage the effect,” Finblox said in a statement.&nbsp;



Crypto lender <a href="https://babel.finance/article-views.html?id=50" target="_blank" rel="noreferrer noopener">Babel Finance</a> suspended withdrawals and redemptions on Friday, citing “unusual liquidity pressures.” The platform gave an <a href="https://cms.blockworks.co/babel-finance-working-to-ease-unusual-liquidity-pressures/" target="_blank" rel="noreferrer noopener">update</a> the following Monday that it has “reached preliminary agreements on the repayment period of some debts” to ease its liquidity pressure in the short term.



<h3 class="wp-block-heading">Week of June 20</h3>



On the eve of Monday market opening, Hong Kong-based crypto exchange Hoo said in a <a href="https://help.hoorhi.shop/hc/en-us/articles/7639261299353" target="_blank" rel="noreferrer noopener">blog post</a> it would be delaying withdrawals for 24 to 72 hours, citing “market volatility and liquidations by large institutions in the crypto industry,” raising panic among its users as many looked to request withdrawals. The exchange <a href="https://help.hoorhi.shop/hc/en-us/articles/7749830351129-Announcement-on-Openning-Withdrawal-Currency-of-Hoo" target="_blank" rel="noreferrer noopener">reopened withdrawal</a> for some tokens starting Wednesday.&nbsp;



In its latest announcement, posted on Friday, Hoo <a href="https://help.hoorhi.shop/hc/en-us/articles/7826670082073-Supplementary-notice-on-the-token-withdrawals-of-Hoo" target="_blank" rel="noreferrer noopener">said</a> some of its partners and institutions have faced liquidity issues, which resulted in &#8220;the unusual phenomenon of Hoo’s custodian fund return channels in these institutions.”&nbsp;



“At present, Hoo is actively communicating and solving problems with relevant institutions and third parties,” the statement read.&nbsp;



Meanwhile, crypto broker <a href="https://cms.blockworks.co/three-arrows-capital-brink-default-owes-voyager-657m/" target="_blank" rel="noreferrer noopener">Voyager Digital</a> revealed Wednesday it had exposure to 3AC — the company sought to recover about $657 million allegedly loaned to the hedge fund.



Australia-based crypto lender <a href="https://cms.blockworks.co/crypto-lender-maple-finance-latest-to-warn-of-insufficient-cash-amid-market-turmoil/" target="_blank" rel="noreferrer noopener">Maple Finance</a> also faced liquidity pressures and said Tuesday its lenders must wait for borrower repayments. “There may be instances where there is insufficient cash in pools,” the company <a href="https://maple.finance/news/managing-liquidity/" target="_blank" rel="noreferrer noopener">said</a>.&nbsp;



Crypto exchange <a href="https://cms.blockworks.co/coinflex-halts-withdrawals-citing-uncertainty-around-unnamed-counterparty/" target="_blank" rel="noreferrer noopener">CoinFLEX</a> was one of the most recent firms to announce a pause in withdrawals, the company said Thursday. Customers can continue to trade and deposit, but no funds can be taken off the platform, according to a statement.



<h3 class="wp-block-heading">What&#8217;s in store for the week of June 27?</h3>



There remains a great deal of uncertainty heading into the final week of June, and market participants are proceeding with trepidation, mindful of potential shoes yet to drop.



On Monday, Voyager issued a notice of default to 3AC after the latter failed to make any required payments.



&#8220;Voyager intends to pursue recovery from 3AC and is in discussions with the Company&#8217;s advisors as to legal remedies available,&#8221; the company wrote in a press release, declining Blockworks&#8217; request for further comment.



The company has engaged Moelis &amp; Company as financial advisors, and it has accessed the first $75 million of its <a href="https://cms.blockworks.co/voyager-to-borrow-500m-from-alameda-amid-insolvency-rumors/" target="_blank" rel="noreferrer noopener">line of credit with Alameda Research</a>, according to the statement.



“When one of the largest crypto hedge funds can be underwater due to leverage, participants in the market must be aware of the total leverage in the market and how it is affected during times when this credit suddenly vanishes,” Mads Eberhardt, cryptocurrency analyst at Saxo Bank, <a href="https://www.home.saxo/content/articles/cryptocurrencies/crypto-weekly-20062022" target="_blank" rel="noreferrer noopener">wrote in a blog post</a>.



“[That] has the power to take many crypto lenders to their knees, effectively fueling the contagion further,” he noted.



This story was updated on June 27, 2022, at 8:15 am ET.



Correction, June 28, 2022, at 10:30 am ET: Mads Eberhardt&#8217;s comments came from the Saxo Bank blog.



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Crypto Firms On Alert During Market Uncertainty as 3AC Defaults

<div id="highlights-block_62b4c14bccc0b" class="highlights">
 <ul>
 <li>CoinFLEX is halting withdrawals until at least June 30, the exchange said</li>
 <li>The unnamed counterparty is not Three Arrows Capital, Celsius or BlockFi, the announcement said</li>
 </ul>
 
</div>



CoinFLEX has suspended all withdrawals in the latest instance of an exchange going offline amid turbulent trading.&nbsp;



Customers can continue to trade and deposit, but no funds can be taken off the platform, the company said in a statement Thursday.&nbsp;



“Due to extreme market conditions last week &amp; continued uncertainty involving a counterparty, today we are announcing that we are pausing all withdrawals,” the exchange <a href="https://coinflex.com/blog/coinflex-update-on-withdrawals/" target="_blank" rel="noreferrer noopener">wrote</a>. “We fully expect to resume withdrawals in a better position as soon as possible.” 



The exchange also halted trading of all of its in-house FLEX tokens.&nbsp;



The unnamed counterparty is not Three Arrows Capital, which is currently facing potential <a href="https://cms.blockworks.co/three-arrows-capital-brink-default-owes-voyager-657m/" target="_blank" rel="noreferrer noopener">insolvency</a>, CoinFLEX said. The firm’s CEO also clarified that the counterparty is not a lending firm, such as Celsius or BlockFi. 



The next update is scheduled to come on June 27, and withdrawals are expected to resume on June 30, the exchange said.



CoinFLEX Telegram members had already been reporting issues with withdrawals for the past few days.



“99.X% of my money is in CoinFLEX right now,” Mark Lamb, CEO of CoinFlex, wrote in the firm’s <a href="https://t.me/coinflex_EN" target="_blank" rel="noreferrer noopener">Telegram channel</a> Thursday. “None of which has been withdrawn.”



The situation highlights ongoing concerns around liquidity as the sell-off in crypto markets continue and companies across the industry start to feel the pressure.&nbsp;



“There is no easy solution, but more robust <a href="https://cms.blockworks.co/wheres-the-liquidity-crypto-lending-explained/#Crypto-Liquidity" target="_blank" rel="noreferrer noopener">liquidity</a> is a good starting place for crypto institutions under stress,” said Timo Lehes, co-founder of blockchain infrastructure company Swarms. 



A spokesperson for CoinFLEX did not immediately return a request for comment.



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