In a bid to tackle the company’s current financial crisis, Crypto Exchange CoinFlex plans to recoup around $84 million from a large individual investor through legal proceedings.
“We have commenced arbitration in HKIAC for the recovery of this $84m as the individual had a legal obligation under the agreement to pay and has refused to do so. His liability to pay is a personal liability”
wrote CoinFlex co-founders Sudhu Arumugam and Mark Lamb in a blog post released on Saturday.
According to the company, the individual investor had a manual margin contract, where users are given a grace period to cover their positions with additional collateral. However, the investor failed to honor their obligations even after several notices.
CoinFlex had previously said that it was forced to freeze withdrawals due to the negligence of this customer. Even though the blog post didn’t explicitly state the individual’s name, the large investor is rumored to be Bitcoin evangelist Roger Ver.
On June 28, Lamb had accused “Bitcoin Jesus” Ver of owing the exchange $47 Million USDC. Both parties had been constantly in contact, but Ver kept on refusing to pay the collateral. Shortly afterwards, Ver came out publicly to deny the allegations, instead stating that it was CoinFlex who owed him money.
“The first estimate of $47m which we communicated did not include the significant loss in liquidating his significant FLEX coin positions. The liquidations have created a final deficit of $84m for the account”
read the blog post.
The company revealed that the customer wanted them first to liquidate the account, but after considerable time requested for physical delivery of the future positions.
“It is clear to us now that he was wasting time and hoping for a bounce in the market that never materialized”
added the co-founders.
CoinFlex expects the arbitration to take up to 12 months to reach settlement.
In the meantime, the exchange intends to explore ways to raise significant funds and convert some of the deposits from large investors into equity.
