Derivatives exchange CoinFlex has said it will take legal action against Roger Ver for failing to pay a $47 million margin call on a leveraged position collateralized by FlexCoin.
Ver was an early crypto investor and promoter of bitcoin, whose collateral for a leveraged position fell below the minimum threshold. This comes after the major cryptocurrency came under pressure following the collapse of the TeraUSD stablecoin.
Last month, CoinFLEX reported that it was halting FLEX coin trading in perpetual swaps and spot trading because a client owed the company $47 million.
CEO Mark Lamb assured the public that the counterparty is not Three Arrows Capital, a Singapore-based hedge fund, nor is it a lending firm ousting lenders from BlockFi and Celsius. It turned out to be later.
CoinFLEX $84M out of pocket after liquidation
Ver was a manual margin client, which meant that, unlike regular users, who automatically liquidated when their leverage ratio fell below a certain threshold, they were given a grace period to add more collateral. Went.
Ver asked the company to liquidate its position, promising to provide funds to take delivery of the futures contracts, but failed to honor the promise. CoinFLEX liquidated its position, but was left with a shortfall of $84 million.
The company is now pursuing legal action against Ver, who is personally liable for $84 million and has refused to pay. CoinFLEX lawyers believe the company has a strong case. The trial process is expected to take about 12 months before a verdict is issued in Hong Kong.
Where now for Coinflex?
CoinFLEX fell victim to the ravages of the cryptocurrency market, which wiped out nearly $2 trillion from the cryptocurrency market capitalization, and Celsius, Voyager Digital and Three Arrows Capital struggled to keep afloat. Voyager Digital and Three Arrows Capital have both filed for bankruptcy.
CoinFLEX is in discussions with a major US exchange about a possible partnership, which is expected to be finalized as soon as funding is secured. Under the agreement, the US exchange will leverage CoinFlex’s platform to provide access to US equity repo markets using an offshore license.
CoinFLEX has hired large depositors to convert their deposits into equity.
While talks with new partners and investors take place, CoinFLEX is unlocking liquidity for 10% of the balance for withdrawals, which comes with a few caveats.
Locked assets, except Flex and FlexUSD, can be sold to raise funds for USDC and cannot be withdrawn or used for collateral.
CoinFLEX expects all technical, legal and operational work to take approximately one week.