Blockchain.com Owes Over $4.3M in FLEX To CoinFLEX
According to a demand notice, cryptocurrency exchange CoinFLEX claims it lent the Luxembourg-based financial services business a total of 3,000,000 FLEX coins last year and is now requesting that Blockchain.com repay coins valued at $4.3 million or face legal action.
“This is completely false,” Blockchain.com said.
The notice, issued February 24, states that Blockchain.com has until March 7 to declare that it will return the FLEX coins, and it has until March 21 to transmit the money. Otherwise, the exchange will be subject to “the initiation of legal processes, including but not limited to” a formal demand for payment known as a statutory demand, according to CoinFLEX.
The money, which is made up of four loans reportedly made between March and June of last year, must be repaid within another 21 days after that.
“You have failed, refused, and/or neglected to repay the 3,000,000 FLEX coins that are long overdue to be repaid,” the letter to Blockchain.com states. “If our client is compelled to enforce its legal rights against you […] it will naturally look towards you for the maximum amount of interest and costs that is recoverable at law.”
The demand is based on a Participation Agreement with an AMM+ (automatic market maker) that was purportedly signed on April 12, 2022, when Bitcoin was trading at $40,000. It is contested whether or not such agreement really exists.
“CoinFLEX has provided no evidence, documentation, or on-chain data to support their claims,” the Blockchain.com statement read.
A Singapore-based legal company by the name of Nine Yards Chambers LLC purportedly delivered the letter to Blockchain.com, and the notification cites CoinFLEX as one of its clients.
“CoinFLEX’s claim is completely meritless and a work of fiction from an insolvent company currently being sued by its customers for dissolution,” Blockchain.com said. “In fact, CoinFLEX owes Blockchain.com for services rendered which remain unpaid at this time, and we will soon initiate collection.”
In a Seychelles court, CoinFLEX started restructuring procedures in August with the goal of raising $84 million to settle its own debt. CEO Mark Lamb and Co-founder Sudhu Arumugam co-founded the exchange in 2019.
“We hope that common sense will prevail and that we will be repaid the FLEX we are owed,” Lamb said.
Blockchain.com, however, has its own financial difficulties. To close a $270 million hole on its balance sheet caused by cash and cryptocurrency it lent to insolvent hedge fund Three Arrows Capital, the company has been seeking to liquidate some of its assets.
Su Zhu and Kyle Davies, co-founders of 3AC, have lately been revealed to be Arumugam and Lamb’s business partners. The three of them are collaborating to launch a new company named Open Exchange (OPNX).
The four were seeking $25 million to launch the firm, according to a pitch deck that was leaked last month. It identified Open Exchange as a platform for clients looking to exchange bankruptcy claims, particularly those pertaining to a number of cryptocurrency businesses that failed last year, just like FTX.
When 3AC collapsed last summer, it was one of the biggest crypto-focused hedge funds. It filed for bankruptcy after suffering significant losses as a result of Terra’s UST stablecoin and LUNA governance token collapsing.
FLEX currency will be the “main token of the new exchange,” according to Zhu, who made the formal announcement of OPNX a few weeks after the pitch deck started to circulate.
12/ i believe those who fail often learn the most about risk & hubris. while those who haven’t experienced it are often destined to learn it later. those that do have a responsibility not to quit, but instead to take the pain & build anew, never compromising on what they learned
— Zhu Su 朱溯 (@zhusu) February 9, 2023
According to the website of the exchange, FLEX currency was first created as the native token for CoinFLEX, offering “users with specific perks that [make] trading on CoinFLEX much better,” such as decreased costs.
Despite the coin’s recent 180% increase to $1.46 over the past 30 days, CoinGecko estimates that FLEX is still about 80% behind its all-time high of $7.56 in December 2021. CoinGecko also identifies CoinFLEX as the only centralized exchange that currently offers the token.
Lamb had already made a public complaint against CoinFlex’s lending methods, despite the fact that this most recent letter addressed to Blockchain.com is said to have been delivered to the firm discreetly.
Lamb said on Twitter that longtime Bitcoin supporter Roger Ver owed CoinFLEX $47 million worth of the stablecoin USDC and that a default notice had been filed a month after CoinFLEX blocked withdrawals in May of last year, citing “uncertainty concerning a counterparty.”
Roger Ver owes CoinFLEX $47 Million USDC. We have a written contract with him obligating him to personally guarantee any negative equity on his CoinFLEX account and top up margin regularly. He has been in default of this agreement and we have served a notice of default.
— Mark Lamb (@MarkDavidLamb) June 28, 2022
The following day, Ver denied the accusations, claiming he was the one who was due “a large amount of money” and was taking action to get the money repaid.
Recently some rumors have been
spreading that I have defaulted on a
debt to a counter-party. These rumors
are false. Not only do I not have a debt
to this counter-party, but this counter-
party owes me a substantial sum of
money, and I am currently seeking the
return of my funds.
— Roger Ver (@rogerkver) June 28, 2022
CoinFLEX declared in July of last year that users will be allowed to withdraw some money from the exchange, although in a restricted way, as Ver and Lamb’s dispute went on. Users could only withdraw up to 10% of their funds, and flexUSD, the platform’s stablecoin, was not included.
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Filed under: Bitcoin - @ February 27, 2023 10:18 am