{"id":245588,"date":"2022-07-12T05:00:36","date_gmt":"2022-07-11T23:30:36","guid":{"rendered":"https:\/\/ambcrypto.com\/?p=245588"},"modified":"2022-07-11T15:27:14","modified_gmt":"2022-07-11T09:57:14","slug":"coinflex-users-are-not-in-the-clear-heres-how-things-could-get-worse","status":"publish","type":"post","link":"https:\/\/ambcrypto.com\/coinflex-users-are-not-in-the-clear-heres-how-things-could-get-worse\/","title":{"rendered":"CoinFLEX users are not in the clear- Fresh concerns hot off the press"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">In a recent <\/span><a href=\"https:\/\/coinflex.com\/blog\/coinflex-update-july-9-2022\/\"><span style=\"font-weight: 400;\">announcement<\/span><\/a><span style=\"font-weight: 400;\"> dated 9 July, co-founders of <\/span><span style=\"font-weight: 400;\">CoinFLEX<\/span><span style=\"font-weight: 400;\">, Sudhu Arumugam and Mark Lamb outlined steps they intend to take in order to help the exchange out of its current liquidity crisis.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">An unfortunate impact of the general bearish outlook of the cryptocurrency market so far this year has been the liquidity problems it has caused for a handful of crypto service providers.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In an <\/span><a href=\"https:\/\/coinflex.com\/blog\/coinflex-update-on-withdrawals\/\"><span style=\"font-weight: 400;\">announcement blog<\/span><\/a><span style=\"font-weight: 400;\"> published by CoinFLEX on 23 June, citing \u201cextreme market conditions and continued uncertainty involving a counterparty,\u201d the exchange informed its users of the suspension of withdrawals on the platform.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In a later <\/span><a href=\"https:\/\/coinflex.com\/blog\/coinflexs-solution-to-resume-withdrawls\/\"><span style=\"font-weight: 400;\">update<\/span><\/a><span style=\"font-weight: 400;\"> on 27 June, the exchange announced the launch of a recovery token called <\/span><a href=\"https:\/\/cfv2-media.s3.ap-northeast-1.amazonaws.com\/media\/pdf\/rvUSD_Whitepaper.pdf\"><span style=\"font-weight: 400;\">Recovery Value USD (rvUSD)<\/span><\/a><span style=\"font-weight: 400;\">, through which it had hoped to monetize the personal collateral of the alleged customer whose account ran into negative equity.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In the new announcement, CoinFLEX noted that due to a written manual margin arrangement with \u201ca <\/span><span style=\"font-weight: 400;\">large individual customer,\u201d the customer was obligated to send more collateral to the exchange to support its positions before liquidation. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">There was also an arrangement to personally indemnify the exchange for shortfalls in the account following the liquidations of its positions. CoinFLEX alleged that liquidating the collaterals in a bear market was a difficult task leading it to incur a deficit of $84 million which the customer allegedly failed to pay back.\u00a0<\/span><\/p>\n<h3><b>Arbitration proceedings in Hong Kong<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">The exchange, in its update, informed users that it had initiated an arbitration proceeding against the customer in question before the Hong Kong International Arbitration Centre for the recovery of this $84 million. Noting the impact of the liquidity crisis on the exchange\u2019s FLEX coin, co-founders <\/span><span style=\"font-weight: 400;\">Arumugam and Lamb stated,<\/span><\/p>\n<blockquote><p><span style=\"font-weight: 400;\">\u201cWe are concerned that as trading resumes, the price of FLEX Coin may be volatile which may have implications on the value of the collateral of our other customers. We believe the recovery of the debt will help build confidence and will help shore up the trading price of FLEX Coin. The vast majority of the receivables in CoinFLEX\u2019s balance sheet is from the debtor we are pursuing, but there are many other accounts that will, unfortunately, become receivables due to the sharp drop expected in FLEX Coin price when trading resumes.\u201d<\/span><\/p><\/blockquote>\n<p><span style=\"font-weight: 400;\">In addition to the arbitration proceedings, the exchange is looking to raise, \u201ca significant amount of funds from investors.\u201d According to the update, CoinFLEX confirmed that,<\/span><\/p>\n<blockquote><p><span style=\"font-weight: 400;\">\u201cThere are a number of investors in this group of large depositors who have indicated that they may be in a position to help the business move forward if we can all find a workable solution. We remain extremely encouraged by these conversations.\u201d<\/span><\/p><\/blockquote>\n<h3><b>Balances made <\/b><b>available for withdrawal<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Further to the steps outlined above, CoinFLEX came up with a \u201cplan to create some temporary liquidity for CoinFLEX depositors.\u201d According to the co-founders, the exchange intends to make available for withdrawal now, only 10% of customers\u2019 balances.<\/span><\/p>\n<p>As per data from <a href=\"https:\/\/www.coingecko.com\/en\/coins\/flex-coin\">CoinGecko,<\/a> the price of FLEX coin has noted a 93% decline since the exchange paused withdrawals.<\/p>\n<figure id=\"attachment_245602\" aria-describedby=\"caption-attachment-245602\" style=\"width: 1730px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/ambcrypto.com\/wp-content\/uploads\/2022\/07\/Screenshot-2022-07-11-at-07.54.52.png\"><img decoding=\"async\" class=\"wp-image-245602 size-full\" src=\"http:\/\/ambcrypto.com\/wp-content\/uploads\/2022\/07\/Screenshot-2022-07-11-at-07.54.52.png\" alt=\"\" width=\"1730\" height=\"1014\" srcset=\"https:\/\/ambcrypto.com\/wp-content\/uploads\/2022\/07\/Screenshot-2022-07-11-at-07.54.52.png 1730w, https:\/\/ambcrypto.com\/wp-content\/uploads\/2022\/07\/Screenshot-2022-07-11-at-07.54.52-300x176.png 300w, https:\/\/ambcrypto.com\/wp-content\/uploads\/2022\/07\/Screenshot-2022-07-11-at-07.54.52-1024x600.png 1024w, https:\/\/ambcrypto.com\/wp-content\/uploads\/2022\/07\/Screenshot-2022-07-11-at-07.54.52-768x450.png 768w, https:\/\/ambcrypto.com\/wp-content\/uploads\/2022\/07\/Screenshot-2022-07-11-at-07.54.52-1536x900.png 1536w\" sizes=\"(max-width: 1730px) 100vw, 1730px\" \/><\/a><figcaption id=\"caption-attachment-245602\" class=\"wp-caption-text\">Source: CoinGecko<\/figcaption><\/figure>\n","protected":false},"excerpt":{"rendered":"<p>In a recent announcement dated 9 July, co-founders of CoinFLEX, Sudhu Arumugam and Mark Lamb outlined steps they intend to take in order to help the exchange out of its current liquidity crisis.\u00a0 An unfortunate impact of the general bearish outlook of the cryptocurrency market so far this year has been the liquidity problems it<a href=\"https:\/\/ambcrypto.com\/coinflex-users-are-not-in-the-clear-heres-how-things-could-get-worse\/\">Continue reading <span class=\"sr-only\">&#8220;CoinFLEX users are not in the clear- Fresh concerns hot off the press&#8221;<\/span><\/a><\/p>\n","protected":false},"author":64,"featured_media":245603,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"om_disable_all_campaigns":false,"footnotes":""},"categories":[31,66,3,4,20],"tags":[],"class_list":["post-245588","post","type-post","status-publish","format-standard","has-post-thumbnail","category-altcoins-news","category-new-news","category-news","category-social","category-trading-view"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v28.5 (Yoast SEO v28.5) - 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