Katherine Ross

This is a segment from the Empire newsletter. To read full editions, <a href="https://blockworks.co/newsletter/empire">subscribe</a>.



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Bitcoin Jesus will not go quietly into the night…or pay $50 million in alleged unpaid taxes.&nbsp;



Roger Ver, who was <a href="https://blockworks.co/news/roger-ver-tax-fraud-charges">arrested in Spain</a> in April of this year, is arguing that the Department of Justice’s tax fraud charges are “unconstitutional.”&nbsp;



The DOJ filed a “defective indictment,&#8221; Ver’s lawyers <a href="https://storage.courtlistener.com/recap/gov.uscourts.cacd.915322/gov.uscourts.cacd.915322.21.0.pdf">say</a>, that misquotes communications between Ver and his legal teams and — stop me if you’ve <a href="https://blockworks.co/news/nft-artists-sue-sec-regulatory-uncertainty">heard this one before</a> — “hangs on a semblance of regulatory clarity that never existed.”



Ver’s defense claims that Bitcoin Jesus tried to get ahead of the murky tax code in 2014 (which, to be fair, is still a bit unclear 10 years on) by hiring an unnamed law firm to consult on his decision to leave the US. As part of that, they conducted a hypothetical scenario where Ver sold all of his holdings, but the thing is, as Ver’s lawyers explained, he couldn’t sell his bitcoin back in 2014.&nbsp;



“On March 2, 2014, however, such a sale was likely impossible as a technological matter and catastrophic as a matter of market value. At the time, BTC was a thinly traded market with a limited number of active traders,” the filing said. And, unfortunately, the only marketplace to really sell off large amounts of bitcoin was Mt. Gox — which had just collapsed.&nbsp;



So Ver, along with multiple tax experts and attorneys, had basically tried to calculate unrealized gains and exit taxes with all that in mind. Per his lawyers, Ver was also exploring the cost if he was personally on the hook for bitcoin held by his companies.



Obviously, with this being a tax case, there’s a lot of back and forth about the unrealized gains, and Ver’s previous communications regarding his bitcoin sales and how he recorded his bitcoin holdings. But essentially, the motion to dismiss falls back on the fact that the current tax code — and by current, I also mean the framework that existed in 2014 — didn’t really account for crypto.&nbsp;



The indictment relies “on impermissibly vague laws that, at all relevant times, provided no basis for a person of reasonable intelligence to understand the proper application of tax laws to digital currencies; and they rely on the government’s persistent trampling on basic rights and notions of fair play,” his team argued.



The timing of this filing is what’s really interesting. Ver is set, as of right now, for a trial in lower Manhattan starting in early February of next year that could see him potentially extradited to the US. <a href="https://blockworks.co/news/empire-newsletter-trump-presidential-ticket">We’ve talked endlessly</a> about the incoming administration and its seemingly favorable view of crypto and Manhattan prosecutors, to this point, are <a href="https://www.google.com/search?q=manhattan+us+attorney+to+reduce+crypto+cases+prosecutor&amp;rlz=1C5CHFA_enUS1087US1087&amp;oq=manhattan+us+attorney+to+reduce+crypto+cases+prosecutor&amp;gs_lcrp=EgZjaHJvbWUyBggAEEUYOTIHCAEQIRigATIHCAIQIRigAdIBCDkxNTNqMGo5qAIAsAIB&amp;sourceid=chrome&amp;ie=UTF-8">already reducing the amount of crypto cases</a> they go after.



Whether or not Bitcoin Jesus can succeed in getting his case tossed is up to the judge at this point, but I bet his team feels there couldn’t have been a more perfect time for this filing.



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Roger Ver ready to fight over $50M in BTC taxes

Bitcoin investor Roger Ver was charged with tax fraud by the US Department of Justice on Tuesday.



The DOJ is seeking Ver’s extradition for a trial in the US. He was arrested in Spain on US criminal charges. 



The DOJ alleges that Ver evaded $50 million in taxes. Ver, the DOJ noted, became a citizen of St. Kitts and Nevis in 2014, but he still had two US companies — MemoryDealers.com and Agilestar.com. The Justice Department said that Ver bought bitcoin for both himself and the two companies. 



Ver was required to pay an “exit tax” on the capital gains. Both the companies and Ver allegedly owned roughly 131,000 bitcoin in 2014, with the companies specifically owning 73,000 of that sum.



“As a result of his expatriation, Ver allegedly was required under U.S. law to file tax returns that reported capital gains from the constructive sale of his world-wide assets, including the bitcoins, and to report the fair market value of his assets,” the DOJ’s release <a href="https://www.justice.gov/opa/pr/early-bitcoin-investor-charged-tax-fraud">said</a>.



The IRS, the DOJ said, lost “at least” $48 million due to the allegations against Ver.&nbsp;



“The indictment further alleges that by June 2017, Ver’s two companies continued to own approximately 70,000 bitcoins. Around that time, Ver allegedly took possession of those bitcoins and in November 2017 sold tens of thousands of them on cryptocurrency exchanges for approximately $240 million in cash,” a press release from the DOJ said.&nbsp;



Ver also provided “false or misleading information” to a law firm he hired so that he could allegedly conceal the amount of bitcoin both he and his companies held. 



“As a result, the law firm allegedly prepared and filed false tax returns that substantially undervalued the two companies and their 73,000 bitcoins and did not report that Ver owned any bitcoins personally,” the release said.



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DOJ charges Roger Ver with tax fraud

Molly Jane Zuckerman

If you’ve been in crypto for even as long as five years, there’s a pretty good chance that you haven’t heard of Roger Ver.



If you have heard of him, your perception may be of a controversial figure, either by his moniker “Bitcoin Jesus,” his current love for Bitcoin Cash, or by his widespread portrayal in the <a href="https://cointelegraph.com/news/pariahs-of-silicon-valley-how-ben-mezrich-writes-about-the-winklevoss-twins">media</a> as a “very bad influence that you shouldn’t play with” (note that this is how I myself referenced him in 2019).



With all of that in mind —&nbsp;and despite the fact that Ver sent me about $10 in Bitcoin Cash after an interview (hence the Bitcoin Jesus name) — I set out to read his new book, Hijacking Bitcoin, with the hunch that this would be my first book review pan.&nbsp;



I couldn’t have been more wrong. In fact, after finishing Hijacking Bitcoin, my opinion now stands that Bitcoin truly was hijacked, and Ver really was the subject of what has now been an almost decade-long smear campaign.&nbsp;



But even if you remove every bit of conjecture that Ver includes in his history of Bitcoin’s early development, it remains a damning indictment of the turmoil and nastiness that plagued the community after Satoshi Nakamoto took his permanent step back.&nbsp;



I thought that Hijacking Bitcoin, written by both Ver and academic Steve Patterson, would be full of spicy conspiracy theories. What I got instead was a measured history of Bitcoin’s development and the blocksize wars, written from the perspective of a clearly very frustrated Ver taking an opportunity to get his side of the story out all at once.



While you won’t get much insight into the many personal conflicts that Ver must have experienced as one of Bitcoin’s first investors and proponents, I see the choice to leave the emotional aside as his attempt to reach a wider audience. Far fewer people would want to read a history book written by an angry historian with a clear vendetta. And regardless of my initial expectations, that’s not what this is at all.



At its core, Hijacking Bitcoin seeks to create a historical record of the myriad ways that Bitcoin’s development has evolved since Satoshi’s original invention made it to the web in 2009.&nbsp;



Bitcoin was initially envisioned as a scalable, electronic cash system. Without getting too into the technical details, the book’s main thesis is an attempt to catalog how Bitcoin has since morphed into the fee-heavy, store of value currency it is today.



As Ver writes: “Even if you like the changes that Bitcoin Core has made, the historical record is clear that they radically differ from the original design [&#8230;] It should be clear that it’s not a question of whether Bitcoin Core changed the original design. The question is whether you like their changes.”



The changes Ver refers to are the controversial “block size wars,” a period marked by an intense struggle over the direction of Bitcoin&#8217;s underlying technology. At the heart of the fierce debate was the question of block size: The maximum amount of transaction data that a block in the blockchain could hold.&nbsp;



While Satoshi Nakamoto had set a 1MB cap in the year or so after Bitcoin’s launch, it was meant to be a temporary solution. But don’t take Ver’s word for it, for Satoshi did at one point write online: “The eventual solution will be to not care how big it gets.”



When Bitcoin became more widely known and began to scale, the 1MB limit created a bottleneck in transactions. While all involved with Bitcoin were aware that a solution was necessary, not everyone agreed on what the solution should be.



One camp, mainly consisting of Core developers, opposed larger blocks on fears of centralization. They posited off-chain solutions like Lightning Network and Segregated Witness (SegWit) as solutions that would still ensure Bitcoin’s security and decentralization. 



The other camp, with Ver firmly at the helm, argued fervently for on-chain scaling and a larger block size, which they believed was in line with Satoshi’s original intentions for the tech to eventually be used as electronic cash.



The intense debate culminated in a schism within the Bitcoin community. In August 2017, unable to reach a consensus, the blockchain underwent a hard fork — a split that resulted in the creation of Bitcoin Cash (which scaled to 8MB larger blocks) and with the Bitcoin chain eventually implementing SegWit.



In the book, Ver continues:



“We may never know the true motivation behind Bitcoin Core’s decision to overhaul Satoshi’s design. Maybe it happened in good faith. Maybe it happened because Core was infiltrated. Regardless, the result is the same: a small-block version of Bitcoin that is considerably less disruptive to the status quo. If interested parties did not directly corrupt Bitcoin, they certainly [benefited] from its corruption.”



Hijacking Bitcoin left me feeling puzzled over what reason there could possibly have been to create a new type of currency — particularly an electronic, non-government currency specifically created as in the wake of the 2008 crisis — that does not scale to actually compete with credit card companies.



But regardless of which side of the debate you fall on —&nbsp;whether you wish Bitcoin would have been developed as a true digital cash with large blocks, or whether you’re more than happy with a gold-like store of value coin and small blocks —&nbsp;I believe it&#8217;s vitally important to understand where the crypto industry comes from. You could read this book, walk away thinking that Bitcoin is in a much better place now than Satoshi could have ever envisioned, and still have learned something useful.



Ver and Patterson remind us that cryptocurrency was not actually invented to support MEV, staking, tokenization — and I don’t buy the argument that you don’t need to have at least a basic knowledge of the very first coin that spawned this entire industry in order to appreciate what crypto is.



Read more from our opinion section: <a href="https://blockworks.co/news/oracle-thriller-novel-smart-contract">How a smart contract gets away with murder: A review of ‘The Oracle’</a>



Because if you work in crypto, believe in crypto, are passionate about Web3, DeFi and the like, not understanding how the crypto space came to be the mass of coins (and greed) that it is today is doing yourself a grave disservice.



As just one example, Hijacking Bitcoin’s chapter on the intense censorship of all forms of debate on the block size issue in the Bitcoin community’s key online forums is the antithesis of what so much of Web3 stands for today.



If you want to be crypto native, you want to grow Web3, you want to build a new financial system, you should understand where crypto came from and what parts of its history shouldn’t be repeated.&nbsp;



The book ends with this thought from Ver about Bitcoin, but I believe it could be applicable to the wider crypto ecosystem as a whole:



“Whether Bitcoin ends up being a peer-to-peer cash system or a control system within a dystopian nightmare depends on what decisions we make going forward.”



If you want to make the right decisions, reading this book might be a good start.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1024" height="256" src="https://blockworks-co.imgix.net/wp-content/uploads/2023/06/Off-Topic-with-Molly-Jane_20230616a-1.png?w=1024&amp;h=1024" alt="" class="wp-image-60166" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2023/06/Off-Topic-with-Molly-Jane_20230616a-1.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2023/06/Off-Topic-with-Molly-Jane_20230616a-1.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2023/06/Off-Topic-with-Molly-Jane_20230616a-1.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2023/06/Off-Topic-with-Molly-Jane_20230616a-1.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2023/06/Off-Topic-with-Molly-Jane_20230616a-1.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2023/06/Off-Topic-with-Molly-Jane_20230616a-1.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2023/06/Off-Topic-with-Molly-Jane_20230616a-1.png?w=80 80w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>







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I don’t care much about tech, I don’t care a whole lot about finance, either. I care about writing stories and watching weird things unfold. And that’s why I’ve ended up in crypto. But because I’m missing that passion for what crypto and blockchain are all about — finance, tech, privacy, yadda yadda — I’m going to write instead about what I am actually interested in. Everything about crypto that has very little to do with crypto. That’s what this column will be about. All the tangential stories that come out of the blockchain and crypto space, what I think about them, and how I navigate it all as a skeptical former Russian literature major. It’s precisely my perch as an outsider that lets me do what I do: Opine on all sides of any crypto issue, no strings attached, no skin in the game. If you want to talk crypto with me, let’s go off topic.



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Roger Ver was right about Bitcoin

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

Shalini Nagarajan

Bitcoin Cash proponent Roger Ver is once again feuding with an embattled crypto company over bad trades worth millions of dollars — this time, it’s a subsidiary of bankrupt lender Genesis.



Genesis subsidiary GGC International filed a court summons in New York earlier this week, demanding Ver pay no less than $20 million to cover a set of crypto options, which expired at the end of December.



Ver, once referred to as “Bitcoin Jesus” for his BTC evangelism before staunchly supporting the Bitcoin Cash hard fork in 2017, says he won’t be paying up.&nbsp;



In a <a href="https://www.reddit.com/r/btc/comments/10ki2ll/did_roger_ver_get_rekt/" target="_blank" rel="noreferrer noopener">Reddit post</a> Wednesday, Ver claimed he has enough funds to pay Genesis, and even said he’d be “happy to pay,” but it’s Genesis that failed to hold up its end of the bargain.



“&#8230; Genesis was required by our agreement to remain solvent — as Genesis can’t ask its clients to play a ‘heads clients lose, tails Genesis wins’ game,” Ver wrote. He further claimed that he’d asked Genesis in June for assurances of its solvency, but didn’t receive what he wanted to know.



GGC International is a British Virgin Island company that facilitates crypto derivatives and spot trading, according to Genesis’ <a href="https://genesistrading.com/legal/regulatory-information" target="_blank" rel="noreferrer noopener">website</a>.&nbsp;



Genesis, itself a subsidiary of <a href="https://www.reuters.com/business/finance/who-is-barry-silbert-head-genesis-owner-dcg-2023-01-20/" target="_blank" rel="noreferrer noopener">Barry Silbert’s</a> crypto-conglomerate Digital Currency Group, <a href="https://blockworks.co/news/genesis-in-chapter-11-wont-insulate-silbert-winklevoss-says" target="_blank" rel="noreferrer noopener">filed for bankruptcy</a> last week, about two months after halting customer withdrawals and loan originations. But GGC International hasn’t filed for bankruptcy just yet.



<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">On the topic of <a href="https://twitter.com/hashtag/Genesis?src=hash&amp;ref_src=twsrc%5Etfw">#Genesis</a>: <a href="https://t.co/2a0fYu5P3E">https://t.co/2a0fYu5P3E</a> <a href="https://t.co/a6tA0HISMo">pic.twitter.com/a6tA0HISMo</a>&mdash; Roger Ver (@rogerkver) <a href="https://twitter.com/rogerkver/status/1618270413435568131?ref_src=twsrc%5Etfw">January 25, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Blockworks has reached out to both Ver and Genesis for comment.&nbsp;



While it’s unclear whether <a href="https://www.offshorealert.com/ggc-international-ltd-v-roger-ver-summons-with-notice-failure-to-settle-20m-expired-crypto-options/" target="_blank" rel="noreferrer noopener">courts</a> will compel Ver to cover the expired options, this isn’t the first time he&#8217;s been challenged on trading debt.



Last July, he was entangled with a smaller platform, <a href="https://blockworks.co/news/coinflex-takes-legal-action-to-recover-84m-from-single-customer" target="_blank" rel="noreferrer noopener">CoinFLEX</a>, after CEO Mark Lamb accused him of owing the company $47 million in USDC after he failed to meet a margin call.&nbsp;



CoinFLEX later filed <a href="https://blockworks.co/news/coinflex-ceo-files-default-notice-against-bitcoiner-roger-ver" target="_blank" rel="noreferrer noopener">legal action</a> in Hong Kong against Ver, saying its estimated losses from Ver’s refusal to pay the debt, which had nearly doubled to $84 million.&nbsp;



Ver denied owing CoinFLEX and instead alleged the now-bankrupt exchange actually left him out of pocket.



Updated Jan. 27, 2023 at 4:16 am ET: Added context in first paragraph.



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Roger Ver Says He Won’t Pay Genesis $20M For Bad Trades

<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 is-layout-flow wp-block-quote-is-layout-flow">“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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