Incapacity to renew withdrawals on Thursday

Bitcoin and other cryptocurrencies are in free fall.

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CEO Mark Lamb said it may not allow customers to withdraw funds on Thursday as originally planned.

“We’ll need more time. And it’s unlikely that withdrawals will be reactivated tomorrow,” Lamb told CNBC.

However, CoinFlex is in talks with a number of large funds interested in purchasing $47 million in debt allegedly from investor Roger Ver, Lamb added.

CoinFlex is the latest victim of a cryptocurrency crash that has seen billions of dollars wiped off the market during the most recent “crypto winter”. Bitcoin has lost more than 50% of its value this year and is down about 70% from its all-time high last November, while ether is down 70% this year and more than 75% from its peak. it.

Cryptocurrency Exchange Withdrawals paused for customers last week cited “extreme market conditions,” and said an individual investor owes about $47 million. Initially, CoinFlex did not name customers, but on Tuesday, Lamb claims the owner is Roger Verwho was dubbed “Bitcoin Jesus” for his indoctrination views about cryptocurrencies in the early days of the industry.

Ver has denied that he owes CoinFlex money. Ver was not immediately available for comment on this story when contacted by CNBC.

CoinFlex claims that Ver’s account has fallen into “negative equity”. Usually, the exchange will liquidate the investor’s position in this situation. But Ver had a specific agreement that meant this didn’t happen, the exchange said.

To fix the $47 million loss in CoinFlex’s balance sheet, the company is issuing a token called Recovery Value USD, or rvUSD, and attracting investors with a 20% return on holdings. virtual money. Lamb said the ability to pay that interest would come from withdrawing funds from Ver plus a “finance fee” that had been imposed on him.

“We don’t know what will happen then if he doesn’t pay or if he does, our focus right now is…getting… these money,” Lamb said.

He added that he is confident “that one way or another this recovery will happen.”

Lamb says the company is talking to multiple funds that buy companies’ distressed debt and potentially buy the full $47 million.

“The good news is the number of players contacted who are interested in this debt offering and this token offering is extremely well capitalized,” Lamb said, adding that some of the funds contacted had more than 10 billion dollars. in assets under management.

Lamb said that some of the requests came from traditional funds rather than crypto-focused funds, but declined to name any of them.

“We’re talking tens of millions[of dollars]. It comes from a combination of hard-earned funds, existing users of the platform, and investors in CoinFlex,” Lamb told CNBC.

CoinFlex vs ‘Bitcoin Jesus’ Fight

The Lamb and Ver controversy marks the latest story in the crypto market amid a slump in digital currency prices.

This week, Lamb said Ver was sent a notice of default. The CoinFlex CEO told CNBC that the goal is to “continue talking to him (Ver) and resolve this amicably.” However, Lamb said there are other avenues for legal recourse.

“We also have an obligation to go through the appropriate legal channels,” he said.

The agreement between CoinFlex and Ver means that if an investor fails to meet the margin call, his positions will not be automatically liquidated as usual.

A margin call is a situation in which an investor must commit more funds to avoid a loss in a trade made with borrowed cash.

Lamb said that CoinFlex felt comfortable coming to such an agreement because of “the data we’ve seen around his capitalization.”

But CoinFlex will now scrap such arrangements, Lamb said.

“In retrospect, no no-liquidation deal would certainly have been better,” Lamb said.

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