CoinFLEX’s restructuring plan approval propels FLEX token higher
CoinFLEX’s restructuring plan approval propels FLEX token higher Oluwapelumi Adejumo · 12 mins ago · 2 min read
CoinFLEX’s FLEX token has outperformed other notable digital assets like Bitcoin and Ethereum in the last 24 hours, rising by more than 20%.
2 min read
Updated: March 7, 2023 at 4:35 pm
Cover art/illustration via CryptoSlate
Embattled crypto exchange CoinFLEX said it received approval for a restructuring plan from the Seychelles courts on March 6.
The exchange added that it was halting the trading of locked assets like LUSD and LETH until the Seychelles court published the court order.
CoinFLEX’s restructuring efforts
In August 2022, CoinFLEX filed for restructuring after it struggled to recover an $84 million debt from crypto investor Roger Ver. The debt plunged it into a liquidity crunch that culminated in the suspension of users’ withdrawals.
Since then, the exchange has made several efforts to make its customers whole. One of its plans included the issuance of a Recovery Value USD (rvUSD) token that would help its liquidity issues.
Besides that, the firm announced a significant change to its business model in October 2022. The firm issued most of its shares to customers and adopted a community-led model that gave users 65% equity in the company.
However, the company’s association with the founders of the defunct Three Arrows Capital (3AC), Su Zhu and Kyle Davies, has raised more questions about its operations.
FLEX value rises
CoinFLEX’s FLEX token has risen by more than 3500% in the last sixty days, according to CryptoSlate’s data.
The digital asset’s value has moved from around five cents to over $2 since it was revealed that it would be the utility token of the new bankruptcy claim exchange, OPNX — developed by CoinFLEX’s founders, Zhu, and Davies.
This means that FLEX has outperformed other notable digital assets like Bitcoin and Ethereum during the same period.
For context, FLEX has risen by more than 20% in the last 24 hours to $2.01 at the time of writing.
Meanwhile, despite the improved price performance, the FLEX token is currently only available on the struggling CoinFLEX exchange and two other decentralized exchanges, Uniswap and Tangoswap.
3AC co-founders launch marketplace to trade crypto claims
3AC co-founders launch marketplace to trade crypto claims Oluwapelumi Adejumo · 7 hours ago · 1 min read
Open Exchange said there is “a $20 billion market of claimants” desperately searching for a marketplace to monetize their claims against bankrupt crypto firms.
1 min read
Updated: February 9, 2023 at 10:03 pm
Cover art/illustration via CryptoSlate
Founders of bankrupt crypto hedge fund Three Arrows Capital founders Zhu Su and Kyle Davies, in collaboration with CoinFLEX co-founders, have launched the “first public marketplace for crypto claims” Open Exchange.
According to a Feb. 9 Twitter thread, Open Exchange (OPNX) said there is “a $20 billion market of claimants” desperately searching for a marketplace to monetize their claims against bankrupt crypto firms like FTX, Voyager, Celsius, Genesis, BlockFi, Mt Gox, HodlNaut, 3AC, and many others.
The new centralized exchange added that it would build a centralized exchange with “real-time public cryptographic audits of the leverage in the system— the collateral backing open interest.”
“Our goal is to combine the transparency and trustlessness of DeFi, with the performance and UX of a CEX.”
OPNX said its native token would be CoinFLEX’s FLEX. The token acts as the exchange’s fee-paying token and would maintain its current tokenomics.
Zhu Su corroborated the exchange’s statement in a separate Twitter thread. He added that the exchange would implement all the previous year’s knowledge into their new operations.
CryptoSlate previously reported that the 3AC founders sought $25 million to launch a new crypto exchange called GTX.
Recent 3AC Stories
Defunct Crypto Hedge Fund Three Arrows Capital Founders Seek $25 Million To Start New Exchange Amid Scrutiny
According to reports, the founders of the now-defunct crypto hedge fund Three Arrows Capital (3AC) are seeking to raise $25 million from investors to start a new crypto exchange called GTX. This solicitation for new capital comes after 3AC co-founders Su Zhu and Kyle Davies were subpoenaed over the social media platform Twitter.
Pitch Deck Shows Three Arrows Capital Co-Founders Seek New Investment for Crypto Exchange GTX
There’s a flurry of reports and screenshots of an alleged pitch deck and website that claim the two 3AC co-founders, Su Zhu and Kyle Davies, are attempting to raise $25 million from investors. They allegedly want to start a new exchange called GTX. The crypto hedge fund Three Arrows Capital filed for Chapter 15 bankruptcy protection during the first week of July 2022.
3AC founders Zhu and Davies are aiming raise $25 million for new crypto exchange “GTX”
What could go wrong?! pic.twitter.com/vm3NFBYdNZ
— Crypto Crib (@Crypto_Crib_) January 16, 2023
It is alleged that the company’s liquidators have had difficulty communicating with the two co-founders. Zhu and Davies were recently served subpoenas via Twitter. Additionally, reports indicate that 3AC is allegedly being investigated for potential legal violations by the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).
In addition to Zhu and Davies, two Coinflex executives, Mark Lamb and Sudhu Arumugam, are also mentioned as being part of the new team. Coinflex, like Three Arrows Capital, also suffered from financial issues and filed for restructuring services in Seychelles last August.
Of course, the alleged pitch deck and website screenshots were shared on social media, and the 3AC founders were widely mocked. Both founders have been more active on social media recently, but they have not addressed the recent speculation about them starting a new crypto exchange called GTX.
As of the time of this writing, it has not been officially confirmed whether the 3AC duo is starting a new crypto exchange.
Tags in this story
Bankruptcy, CFTC, Chapter 15 Bankruptcy, Coinflex, communicating, Crypto, difficulty, Exchange, Executive, financial, GTX, hedge fund, investigate, investment, Kyle Davies, legal, legal violations, liquidators, mock, pitch deck, recent, restructuring, SEC, Seychelles, Social Media, Speculation, Su Zhu, Subpoenas, Three Arrows Capital, Twitter, violation, vocal, website
What do you think of the founders of Three Arrows Capital seeking new investment and launching a new crypto exchange amidst legal scrutiny and previous financial troubles? Let us know what you think about this subject in the comments section below.
Jamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 6,000 articles for Bitcoin.com News about the disruptive protocols emerging today.
Image Credits: Shutterstock, Pixabay, Wiki Commons
Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.
airing dirty laundry in public
The Inside Story Of The Roger Ver Vs. CoinFLEX Conflict
The infamous Roger Ver is back in the headlines for all the wrong reasons. Like many players in the industry, the derivatives exchange CoinFLEX recently ran into financial trouble. Surprisingly, they blamed it all on Roger Ver and the circus started. Luckily for us, Chinese journalist Colin Wu covered “the entire insider details through a source close to the situation” in his newsletter. However, as you can see, it’s an anonymous source. So, take the story we’re about to analyze with a grain of salt.
The summary of the situation according to Wu:
“On June 24, 2022, the exchange CoinFLEX announced that it made the decision to halt user withdraws, and the price of the platform Token FLEX subsequently plummeted, from $4.30 to less than $1.50 in four hours. At the same time, FlexUSD, the platform’s stablecoin, also began to de-peg, with prices dropping as low as $0.23.”
The funny thing is that both entities were clearly in business together. On May 14th, Roger Ver tweeted, “Interest paying FlexUSD by CoinFLEX is on its way to being the default stable coin for the whole SmartBCH ecosystem if USDT & USDC don’t move quickly.” How did everything deteriorate so fast? That’s what this article’s about.
Interest paying #FlexUSD by @CoinFLEXdotcom is on its way to being the default stable coin for the whole @SmartBCH ecosystem if #USDT & #USDC don’t move quickly.https://t.co/HG14Ik6U0o
— Roger Ver (@rogerkver) May 14, 2022
Roger Ver Vs. CoinFLEX, The Play By Play
The story starts with CoinFLEX announcing to their partners that they “opened a special account for Roger Ver.” The account’s characteristics guaranteed that Roger Ver “would not be liquidated immediately if it fell below the maintenance margin, but rather that he would be given sufficient time to make a margin call.” Nothing special here, the man is a high-net-worth individual, deals like this are a dime a dozen in high finance.
As a guarantee, Roger Ver offered “a margin of BCH,” valued “at around $400.” Then, the Terra collapse happened and the whole crypto market crashed. By the time CoinFLEX ”faced a liquidity crisis,” Bitcoin Cash was worth around $120. It’s still at that price range at the time of writing. This is where things get insane. The biggest revelation of Wu’s story is at the end of this paragraph.
“If that were all, CoinFLEX would have been able to cover its shortfall. However, prior to this, CoinFLEX had issued its own stablecoin, FlexUSD, like other exchanges. At this point, CoinFLEX used FlexUSD to buy a large amount of FLEX from the secondary market and opened short position to hedge the spot price. However, the counterparty to this short position was also Roger Ver!”
As we’ve seen happen again and again, “when the withdrawal restriction announcement was made, CoinFLEX’s total funds began to fall in a cyclical fashion.” And all hell broke loose.
BCH price chart on Coinbase | Source: BCH/USD on TradingView.com
An All-Out Twitter War
On June 27th, the company’s CEO Mark Lamb tweeted, “CoinFLEX made the decision to halt user withdrawals on June 23, shortly after a long-time customer of CoinFLEX went into negative equity. ” Immediately after, the rumor that Roger Ver was that “long-time customer” began circulating.
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
The Bitcoin Cash leader went on the offensive and tweeted a statement obviously written by a lawyer. “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.” How could those two statements be true? Remember that “the counterparty to this short position was also Roger Ver!”
He had a long track record of previously topping up margin and meeting margin requirements in accordance with this agreement. We have been speaking to him on calls frequently about this situation with the aim of resolving it. We still would like to resolve it.
— Mark Lamb 💪 (@MarkDavidLamb) June 28, 2022
However, Mark Lamb was not having it. Even though both parties were negotiating, Lamb took to Twitter and stated, “CoinFLEX also categorically denies that we have any debts owing to him.” Plus, “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.”
Even if CoinFLEX is right in this instance, did they have to air their dirty laundry in public?
Roger Ver Vs. CoinFLEX, The Aftermath
Back to Colin Wu’s newsletter:
“In the end, Roger Ver’s position was completely worn out and turned into negative equity, while CoinFLEX was left with a lot of delisting FLEX. It was revealed that CoinFLEX had a real loss of $120 million, including losses from the de-peg of the stablecoin FlexUSD and the loss of withdrawals (less than $10 million) due to the collapse of the SmartBCH cross-chain bridge, which was built by CoinFLEX.”
And the fact of the matter is that, even if Roger Ver’s debt caused this, CoinFLEX’s risk management team has a few questions to answer. “Roger Ver became almost the only counterparty to the exchange, and this only counterparty had the privilege of not replenishing the margin in time,” Wu concludes. It was an unfortunate sequence of events, but both parties signed those deals and both parties took to Twitter to resolve what should’ve been a private matter.
Shame all around.
Featured Image by Gerd Altmann from Pixabay | Charts by TradingView
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