In his statement, coinflex The founders said, “We have initiated arbitration at HKIAC to recover this $84m because the individual had a legal obligation under the agreement to pay and refused to do so. His liability to pay is a personal obligation that has Meaning that the person is personally liable to pay the total amount, so our lawyers are confident that we can enforce the award against them.”
court case:
According to the founders, a large individual client had a written manual margin arrangement with CoinFLEX. Unlike normal users who are automatically liquidated when their margin ratio falls below the minimum requirements, users on manual margin have a grace period to send more collateral to support their positions before liquidation.
“The client’s privilege came with a requirement that the client personally indemnify us for the shortfall in his account following the liquidation of his positions,” the founders said.
However, Coinflex alleges that the client failed to comply with its obligations pursuant to this written agreement.
CoinFlex’s Founders Say “There’s Still One Important Thing loss About $84 million, so we have started action to recover this debt.”
The first estimate was $47 million, which, CoinFlex said, “notifies us that they do not include significant losses in liquidating their significant FLEX Coin positions.
After bidding for that size, CoinFlex said that the liquidation created a final loss of $84m for the account.
CoinFlex claimed that the person asked to terminate his account, however, stopped the process.
The founders revealed that the individual had asked the exchange to terminate his account, “but then after a period of time he wanted to send significant funds to the exchange to take physical delivery of futures positions.”
“It is now clear to us that he was wasting time and expecting a market boom that never happened,” the founders said.
Furthermore, he said, “We tried to judiciously liquidate their account using counterparties on the exchange, but since the position was so critical, they involved slippage as any large or series of large orders could reasonably be will be born.”
The founders of CoinFlex stated that they fully informed the individual and that they cooperated with them and even promised to pay or increase the collateral to cover the shortfall, but in the end, “the promise proved to be empty.” Happened.”
Upon completion of the process, the founders said, “The arbitration process is not a quick process and we estimate that it will take about 12 months to make a decision in Hong Kong. After that, we will be able to enforce that decision on their worldwide assets.” “
According to media reports, the accused investor is reportedly an early investor in Bitcoin and also the promoter of Bitcoin Cash, Roger Ver. However, Ver who is also known as ‘Bitcoin Jesus’ has denied the allegations.
influence:
Currently, CoinFlex’s primary assets are in FLEX Coins and it has over 26 million units in inventory.
Flex price will be affected if trading resumes. Last month, CoinFlex halted withdrawals on its platform after a large investor defaulted on paying $47 million from a margin call.
“We are concerned that the price of Flex Coin may fluctuate as trading resumes, which could have an impact on the value of our other clients’ collateral,” the founders said.
In addition, he added, “We believe that debt recovery will help build confidence and enhance the trading value of FlexCoin. In the interim, we hope that by providing a complete picture, and By raising capital, our customers will gain confidence in the potential of Flex Coin.”
Most of the receivables in CoinFlex’s balance sheet are from debtors, however, there are several other accounts that Sudhu and Mark believe “unfortunately, due to the expectation of a sharp drop in the price of FlexCoin upon commencement of trading, there are several other accounts receivable.” These are accounts using flex coins as collateral.”
“We will publish our balance sheet as soon as we get permission,” the duo said.
To fix the issue, CoinFlex is looking at raising a large amount of money from investors. The exchange is in talks with depositors who wish to help the business by rolling some of their deposits into equity.
“This group of large depositors has a number of investors who have indicated that they may be in a position to help the business grow if we all find a workable solution. We remain extremely excited by these conversations,” the founders said. he said. ,
He added that the Recovery Value USD (RVUSD) will be used in the original or modified format to improve liquidity.
future plans:
The founders of CoinFlex revealed that they are in close discussions with a large US exchange/ATS platform, which intends to enter into a formal joint venture with the company as soon as funding is received.
“We are excited about this potential joint venture arrangement as it will result in the launch of the stock (US equity) repo market and the Deliverable Perpetual Futures platform, which will leverage CoinFlex’s unique IP and technology platform,” the duo said.
Securities lending is a $2.5 trillion market controlled by a handful of prime brokers, and the founders said, “We see great potential because there is no exchange platform for securities lending today.”
The company expects to start a joint venture through their partner’s already established offshore license with the intention of migrating to the USA using the multiple licenses our partner already holds. The joint venture will eventually start using offshore licenses. And, Coinflex expects to migrate to the USA (onshore) over time using multiple licenses.
The founders said the deal would also provide securities holders with a source to earn yields, similar to the way FlexUSD earns yields.