Derivatives exchange CoinFLEX has made headlines recently after first freezing funds for account holders and then for revealing that Roger Ver, a widely known B-Cash advocate, owed the platform $47 million in collateral.
Co-founders Sudhu Arumugam and Mark Lamb have recently released an update on the company’s current state and what they hope to accomplish in the near future. Roger Ver is not mentioned by name in the company update but the previously mentioned $47 million that is owed to CoinFLEX is now estimated to be $84 million. The first estimate did not include the significant loss in liquidating his large FLEX coin positions.
Unlike normal users, Ver (or the account associated with Ver) was not subject to an automatic liquidation when his margin ratio went below CoinFLEX’s minimum requirements.
Users with this account type are given a grace period to provide more collateral in order to support their positions prior to being liquidated. CoinFLEX’s blog post states that, “Unfortunately, this customer failed to honor his obligations pursuant to this written agreement.”
The blog post states that at first the individual requested his account to be liquidated, but then wanted to send significant funds to CoinFLEX in order to take physical delivery of the futures positions. However, it became clear to Arumugam and Lamb that the individual “was wasting time and hoping for a bounce in the market that never materialized.”
The CoinFLEX team attempted to liquidate the account on their own using counterparts on the exchange but the positions were much too large to execute without causing slippage.
“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.”
CoinFLEX will now be taking legal action against this “individual” for failing to uphold his end of the agreement in order to recover the full $84 million. This individual is personally responsible for paying the total amount and CoinFLEX states that they are confident that they will be able to enforce the award against him.
Arumugam and Lamb first describe how things were never meant to develop as bad as they have for the company by stating, “We truly apologize for the trauma this situation has caused the CoinFLEX community.”
They even go as far as to acknowledge the frustration from the community because of their lack of transparency and communication over the last few weeks. The co-founders explained that this was due to “looking for companies or partners to invest in CoinFLEX and have often been under NDAs.”
CoinFLEX aims to remedy the situation by:
CoinFLEX will be looking to raise significant funds from investors and will also speak with large depositors who may want to help the business by converting some of their deposit funds into equity. The company plans on using Recovery Value USD (rvUSD) to improve their liquidity for CoinFLEX.
As for account holders looking to receive their funds back, CoinFLEX will soon allow 10% of all balances to be available for withdrawal. More developments will be communicated to account holders as time goes on.