CoinFLEX becomes the latest exchange to halt withdrawals
The total number of crypto companies that started to halt withdrawals is still increasing. CoinFLEX, the futures crypto exchange, paused every withdrawal on its platform. It was mainly because of the present extreme conditions in the market and issues that involved one counterparty. CoinFLEX was founded in 2019. They are a smaller crypto exchange focused on derivatives trading. They have nearly less than $200 million value locked in total. Aside from that, you will also want to know about What is Klaytn (KLAY) Cryptocurrency?
The cause of the suspension is not Three Arrows Capital
Mark Lamb the CEO of CoinFLEX announced this news on Thursday 23rd June 2022 in a blog post. There he mentioned that because of the last week’s extreme conditions in the market and continuous uncertainty that involved one counterpart, they declared that they are halting every withdrawal. They expect to resume all withdrawals as soon as the position becomes better. They will be fully communicating with everyone as they can get hold of more.
Additionally, the crypto exchange is also suspending every spot and perpetual trading of their FLEX coin for a short period. The company also said one new update will get released on 27th June. On 30th June all withdrawals are expected to resume.
This blog post did not include the name of the involved counterparty. The CEO clarified that this anonymous entity is not Three Arrows Capital, the crypto hedge fund, or some lending platform.
Earlier in the month of June, some insolvency rumors took place around this crypto hedge fund Three Arrows Capital. But soon after that, this Singapore-based hedge fund witnessed its long positions get liquidated as the price of crypto fell.
This firm too bought $200 million priced LUNA. Such an investment did not favor it as there was a fall in the value of the native token of Terra. In the middle of all troubles around Three Arrows Capital, the executives of the company considered many options like asset sale or one bailout.
The CEO of CoinFLEX is very optimistic that things might be back to normal. He said that they are confident about the situation to get fully repaired with all functionality restoration, especially the restoration of withdrawals.
The company at first was not ready to name the investor. They said that the individual is experiencing some temporary liquidity issues. They also mentioned that an involved individual is a person of high integrity of notable means. The liquidity issues were because of a credit crunch in the market of crypto with considerable shareholdings in many unicorn private organizations and a huge portfolio.
Later CoinFLEX named the counterparty Roger Ver, a long-time cryptocurrency investor. He experienced issues of liquidity and was unable to repay stablecoin of $47 million in one margin call. This CoinFLEX investor earned the Bitcoin Jesus nickname. He denied this claim and said he does not owe any money to the crypto exchange. Such a dispute was played out on social media. Lately, it was in a mini-crisis series that rocked cryptocurrency markers recently in some weeks.
Crypto bear market’s ripple effect
This June, the latest cryptocurrency company to pause withdrawal is CoinFLEX. Celsius the cryptocurrency lending giant was the first to do it on the 13th of June. They cited extreme conditions of the market.
Babel Finance is another crypto lender that halted withdrawals along with redemption on its platform. It was mainly for liquidity issues.
Voyager Digital, the crypto broker cut down their daily limit of withdrawal to $10000 from $25000. They signaled a reduction of over 50%. This update came soon after the company declared its total Three Arrows Capital exposure is valued at more than $650 million in USD and BTC.
After this declaration, the shares of Voyager fell 60%. The subsidiary of the company is considering taking some legal steps if Three Arrows Capital is unable to repay its debt.
Finlox, the staking platform is another cryptocurrency firm that has Three Arrows Capital exposure. They too adjusted their withdrawal limit from daily $500 to monthly $1500. They also halted their distribution of rewards.
CoinFLEX issued one new token for raising funds in a bid to restart withdrawals for their customers. It was done after one of their clients was unable to repay a huge debt. They will be issuing a digital coin of $47 million and offer 20 % interest. It is called Recovery Value USD. It is after they halted all withdrawals for their customers and cited extreme conditions in the market and uncertainty that involved one counterparty.