Crypto Exchange CoinFLEX Limits Withdrawals, Keeps Most Assets Locked
CoinFLEX is attempting to resolve its issues by limiting withdrawals ahead of a possible acquisition from equity investors.
CoinFLEX | Source: Shutterstock
key takeaways
- Following a three week shutdown, CoinFLEX said it was opening limited withdrawals to the tune of 10%
- Certain derivatives contracts and open positions on the platform will be closed until further notice
Embattled crypto exchange CoinFLEX said Thursday it has decided to open withdrawals from its platform, albeit under severely limited terms, three weeks after halting the ability to do so.
Users will now be able to withdraw their funds to the tune of 10% with the exception of flexUSD — the exchange’s interest-bearing stablecoin — which cannot be withdrawn until further notice, CoinFLEX said.
The exchange joins a host of other troubled crypto businesses, including lenders and exchanges, in their attempts to wade through the fall out resulting from a liquidity crunch and extreme market volatlity.
Last month, CoinFLEX suspended all withdrawals from its platform citing “extreme market conditions” and continued uncertainty involving an unnamed counterparty for its reasoning. That counterparty was later alleged by CoinFLEX’s chief to be Roger Ver, early bitcoin adopter and CEO of Bitcoin.com.
Ver, sometimes referred to as “Bitcoin Jesus,” was accused by CoinFLEX’s CEO Mark Lamb of owing the exchange $47 million late last month. Ver, who has denied the claims on more than one account, was accused roughly two weeks later by Lamb of owing more than $84 million following calculations of Ver’s final “significant” losses in the exchange’s native FLEX token.
Before final calculations of Ver’s alleged unmet margin call were made, Lamb claimed he was attempting to turn a “problem into an opportunity” by issuing a new token in the hopes of recovering the $47 million shortfall.
Ahead of limits being lifted, CoinFLEX said in its update to users that it would cancel all current pending withdrawals and return all funds to their respective account balances.
“We truly apologize for the trauma this situation has caused the CoinFLEX community,” the exchange’s founders wrote last week. “It is understandable that you vent your frustration at us and continue to do so when you feel we have not been communicative enough. One of the main reasons for our lack of responsiveness in the last two weeks is that we have been looking for companies/partners to invest in CoinFLEX.”
Users’ subaccounts, used for the purpose of derivatives trading and other activities, will also be rolled into their main accounts. Certain open perpetual contract positions will require liquidation when the FLEX/PERP price is updated resulting in a subset of these accounts falling into negative equity, the exchange said.
“To protect other creditors on the platform, we must merge the balances and positions in all subaccounts with their respective main accounts,” CoinFLEX wrote. FlexUSD will no longer hold short perpetual positions and therefore holders will not earn any interest “for the time being.”
The exchange also said it was attempting to resolve its issues with the future possibility of enabling further withdrawals while seeking out a potential acquisition from equity investors. Further updates on its next course of action are expected by the end of next week.
Get the news in your inbox. Explore Blockworks newsletters:
- The Breakdown: Decoding crypto and the markets. Daily.
- Empire: Crypto news and analysis to start your day.
- Forward Guidance: The intersection of crypto, macro and policy.
- 0xResearch: Alpha directly in your inbox.
- Lightspeed: All things Solana.
- The Drop: Apps, games, memes and more.
- Supply Shock: Bitcoin, bitcoin, bitcoin.
