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CoinFLEX CEO Mark Lamb has pushed back plans to resume withdrawals at his exchange on Thursday. The company must first wait to complete its fundraising process, which Lamb claims is making significant progress.
The CoinFLEX Debacle
Speaking with MarketWatch on Wednesday, Lamb said that his exchange has been discussing his insolvency problem with distressed debt funds. He is attempting to bring them onboard his novel yet controversial token sale solution, alongside existing customers and investors.
As CoinFLEX explained on Monday, the exchange has begun issuing a tokenized form of debt called “Recovery Value USD” (rvUSD). The offer is for risk-tolerant investors with annual incomes of $200,000, who can table at least 100,000 USDC. The total fundraising target is 47,000,000 USDC.
Lamb stated that the raise is “making significant progress,” and has garnered tens of millions of dollars in “soft commitments.” The exchange promises buyers a whopping 20% APY – assuming CoinFLEX can source actually source the future liquidity it needs.
The process will ideally take four days, ending this Friday – at which point CoinFLEX can resume withdrawals. The company was one of many platforms that had to freeze customers’ assets amid broader crypto market fears and counterparty insolvency.
On June 11th, Celsius was one of the first platforms forced to freeze customers’ funds. On-chain data shows that the firm hurriedly sourced funds to pay down struggling margin loans shortly afterward. VC firm Three Arrows Capital (3AC) is also in deep water, with multiple counterparties claiming they were ghosted by the firm this month.
The Man Behind it All
However, CoinFLEX’s struggling counterparty is neither Celsius, 3AC, or any large firm. Rather, it’s a high net worth individual who was once heralded as “Bitcoin Jesus”: Bitcoin Cash advocate, Roger Ver.
At least that’s what Lamb claimed, in a shocking reveal over Twitter on Tuesday. Though he initially planned to keep his identity a secret, Lamb broke his silence after Ver publicly denied rumors of owing CoinFLEX money. In fact, Ver claims CoinFLEX is the party that owes him money.
According to Lamb’s explanation on Tuesday, Ver owes CoinFLEX $47 million since his margin position with the exchange has entered negative equity. Though such a position would have ordinarily been liquidated, a prior agreement with Ver has barred them from doing so.
Instead, the firm must raise money from the public to be able to resume customer withdrawals in the short term. Meanwhile, it will wait on Ver to top up more margin later so it can pay its debts to rvUSD holders. In other words, Recovery Value buyers are dependent on Roger Ver paying his debts in order to see their returns.
When questioned by MarketWatch, Ver stood by his claim that he owes no debt. “I’ll make more information public as soon as possible,” he wrote.
Meanwhile, Lamb said he unmasked Ver for two reasons: to correct him, and spur investor confidence in their counterparty. “Since we revealed those details, there have been a significant number of external potential buyers that have come out of the woodwork because of who the counterparty is,” the CEO told MarketWatch.