CoinFLEX users are not in the clear- Fresh concerns hot off the press

In a latest announcement dated 9 July, co-founders of CoinFLEX, Sudhu Arumugam and Mark Lamb outlined steps they intend to take as a way to assist the trade out of its present liquidity disaster. 

An unlucky affect of the overall bearish outlook of the cryptocurrency market to date this yr has been the liquidity issues it has prompted for a handful of crypto service suppliers.

In an announcement blog printed by CoinFLEX on 23 June, citing “extreme market conditions and continued uncertainty involving a counterparty,” the trade knowledgeable its customers of the suspension of withdrawals on the platform.

In a later update on 27 June, the trade introduced the launch of a restoration token known as Recovery Value USD (rvUSD), by means of which it had hoped to monetize the non-public collateral of the alleged buyer whose account bumped into destructive fairness.

In the brand new announcement, CoinFLEX famous that as a consequence of a written handbook margin association with “a large individual customer,” the shopper was obligated to ship extra collateral to the trade to assist its positions earlier than liquidation.

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There was additionally an association to personally indemnify the trade for shortfalls within the account following the liquidations of its positions. CoinFLEX alleged that liquidating the collaterals in a bear market was a tough process main it to incur a deficit of $84 million which the shopper allegedly did not pay again. 

Arbitration proceedings in Hong Kong

The trade, in its replace, knowledgeable customers that it had initiated an arbitration continuing in opposition to the shopper in query earlier than the Hong Kong International Arbitration Centre for the restoration of this $84 million. Noting the affect of the liquidity disaster on the trade’s FLEX coin, co-founders Arumugam and Lamb said,

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“We are concerned that as trading resumes, the price of FLEX Coin may be volatile which may have implications on the value of the collateral of our other customers. We believe the recovery of the debt will help build confidence and will help shore up the trading price of FLEX Coin. The vast majority of the receivables in CoinFLEX’s balance sheet is from the debtor we are pursuing, but there are many other accounts that will, unfortunately, become receivables due to the sharp drop expected in FLEX Coin price when trading resumes.”

In addition to the arbitration proceedings, the trade is trying to increase, “a significant amount of funds from investors.” According to the replace, CoinFLEX confirmed that,

“There are a number of investors in this group of large depositors who have indicated that they may be in a position to help the business move forward if we can all find a workable solution. We remain extremely encouraged by these conversations.”

Balances made obtainable for withdrawal

Further to the steps outlined above, CoinFLEX got here up with a “plan to create some temporary liquidity for CoinFLEX depositors.” According to the co-founders, the trade intends to make obtainable for withdrawal now, solely 10% of consumers’ balances.

As per knowledge from CoinGecko, the value of FLEX coin has famous a 93% decline because the trade paused withdrawals.

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Source: CoinGecko

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