CoinFlex to sue Roger Ver for refusing to pay millions of dollars to CoinFlex for a leveraged position that was liquidated. Traders that wish to leverage their positions are automatically liquidated when they fall below the required threshold.
However, Roger Ver was placed under manual margin call. When the fallout of USDT ripped the crypto markets apart, CoinFlex provided Roger Ver with a grace period to add more funds, which regular customers do not receive.
Ver asked CoinFlex to liquidate the positions, assuring the exchange he will transfer the required capital. CoinFlex liquidated the position but the promised funds were not delivered. As a result, CoinFlex was left with a gap of $84 million.
In a statement released on their website CoinFlex explained what happened:
‘The individual first asked us to liquidate his account, but then continued to tell us for some considerable time afterwards that he wanted to send significant funds to the exchange to take physical delivery of the futures positions.
‘It is clear to us now that he was wasting time and hoping for a bounce in the market that never materialized. We tried to liquidate his account in a prudent manner using counterparts on the exchange but as the positions were so significant, they involved slippage as any large or series of large orders would reasonably create.
‘Throughout the process, we kept the individual fully informed and he had cooperated with us and promised to pay or increase collateral to cover the shortfall but at the end, the promise proved empty.’
The initial estimate was $47 million, however, it did not include the loss from liquidating the FLEX coin positions that were held by Ver.
The arbitration will take place in Hong Kong International Arbitration Centre (HKIAC). It may take 12 months for a ruling to be made. Once a judgement is made on the case, CoinFlex may enforce it against Ver’s assets across the world.
CoinFlex added they they are confident a judgement will be made in their favour.
CoinFlex Future Plans
CoinFlex is in discussions with a large US exchange to achieve a joint venture that will allow CoinFlex to being offering US stocks. Perpetual futures may also be offered.
An offshore license will be used initially, at a later change there will be a migration to the US using licenses of the CoinFlex’s partner. There are also discussions with large FLEX depositors to change their holdings into equities.
Locked cryptocurrencies aside FLEX and FlexUSD may be swapped for USDC to raise capital. As a result, the locked coins cannot be withdrawn out of the platform or used for collateral.
CoinFlex is expecting implantation of the recovery plan to begin in approximately 7 days.
This article was written by Matti Williamson at www.financemagnates.com.