Jun 28, 2022 - Economy

CoinFlex wants Roger Ver to pay them back, please

Photo illustration of Mark Lamb.

Photo illustration: Aïda Amer/Axios. Photo: CoinFlex

Crypto exchange CoinFlex is locked in battle with once-VIP customer and Bitcoin evangelist Roger Ver, trying to recoup funds to make many of its other customers whole, Axios has learned. Only Ver denies he owes the firm any money.

Why it matters: CoinFlex suspended withdrawals last week, saying that a big-time customer owed them money and that the firm had to "resort" to such measures.

Driving the news: That mysterious customer turned out to be Ver, CoinFlex chief Mark Lamb told Axios Tuesday, hours after Ver took to Twitter to deny he owes the firm.

  • Ver's denial of some $47 million USDC CoinFlex says he owes, throws a wrench in the exchange's plans to resume withdrawals on June 30.

CoinFlex chief Lamb talked about his views of the market turmoil, "tokenized solutions" to crypto problems — one which he thinks will specifically help make his customers whole — plus Ver's latest comments.

What's happening: CoinFlex on Monday said it was raising $47 million through a new coin called Recovery Value USD or rvUSD that sports a 20% yield — an enticing reward for those who want to buy tokenized debt.

  • CoinFlex's Lamb referenced Bitfinex's own token as successful historical precedent of "tokenized solutions."
  • While 20% yields might sound like an absurd offering for a firm with liquidity issues, those yields on $47 million of tokens is a drop in the bucket for a centralized exchange that previously measured its daily trading volume in billions.
  • Token issuance is expected to run between Tuesday and July 1.

Ver claimed in a veiled tweet Tuesday: "Not only do I not have a debt to this counter-party, but this counter-party owes me a substantial sum of money..." (Ver did not respond to a message for further comment.)

Lamb says he's had several conversations directly with Ver since CoinFlex's halt last week and that Ver's claims are inaccurate:

  • "His statement is false. It’s completely incorrect. We’re going to do everything we can to recoup these funds," Lamb says.
  • "We don’t know why he’s denying the situation. We hope he changes his mind. We think there is a clear route to recovery for CoinFlex customers and for CoinFlex as a company."

Meanwhile, "There’s a clear history especially with Bitfinex both tokenizing debt and creating tokens that can solve problems in crypto," Lamb said.

  • "The legal system is slow and time consuming," he said.

Separately: Lamb talked about the issue plaguing the industry now:

  • "In crypto, previous bull and bear cycles were driven mostly from people buying coins with dollars and selling coins they had with dollars. This is spot trading."
  • "In this cycle, there has been an enormous explosion of leverage," he said.

Between the lines: When crypto enthusiasts borrow money backed by crypto to buy more crypto, a rapid decline in prices would result in what are called margin calls.

  • When those margin calls go unmet, those customers' positions would be liquidated.

CoinFlex claims that Ver is one such customer who is in debt, but couldn't liquidate the position because of an agreement between them.

  • When asked how CoinFlex will be coming up with that 20% yield, Lamb said: "So that 20% comes from the user itself, paid by Roger upon repayment of the debt owed to us."
  • Ver's denial of his debt owed to CoinFlex puts a wrinkle in that plan.
  • "It was definitely shocking to see [Ver's denial]. It would be significantly easier if there was no dispute," he said.

Recovery Value USD is still a go, Lamb said.

  • "We do still have commitments for a significant, over half of the funds. Even with this denial, those commitments still seem to be in place," he said.

When asked whether CoinFlex might explore bankruptcy proceedings or even a sale in the event funds for rvUSD cannot be raised, Lamb said:

  • "We’re going to do everything possible to make customers whole, so the options are around that."
Go deeper