Cryptocurrency futures exchange CoinFLEX has suspended all withdrawals on the platform due to the current extreme market conditions and issues involving a counterparty.
3AC is not the cause of the suspension of CoinFLEX
CoinFLEX CEO Mark Lamb broke the news in a blog post on Thursday (June 23, 2022), which reads:
“Due to extreme market conditions last week and continued uncertainty regarding a counterparty, we are announcing today that we are suspending all withdrawals. We fully expect to resume withdrawals in a better position as soon as possible. We will communicate fully with you as we learn more.
Additionally, CoinFLEX is suspending all perpetual and spot trading of its FLEX coin for the short term. Meanwhile, the company said a new update is due to be released on June 27, while withdrawals are expected to resume on June 30.
Although the blog post did not name the counterparty involved, Lamb clarified that the unnamed entity is neither crypto hedge fund Three Arrows Capital (3AC) nor any lending platform.
Earlier in June, there were insolvency rumors surrounding Three Arrows Capital. Soon after, the Singapore-based hedge fund saw its long positions liquidated as cryptocurrency prices fell.
The firm also purchased $200 million worth of LUNA, an investment that turned sour after the native Terra token’s value plummeted. Amid the turmoil surrounding 3AC, company executives are considering several options, such as selling assets or a bailout.
Meanwhile, the CEO of CoinFLEX is optimistic that things could return to normal, saying:
“We are confident that this situation can be fully repaired with a restoration of all functionality, namely withdrawals.”
Crypto Bear Market Ripple Effect
CoinFLEX is the latest crypto company to halt withdrawals in June. Crypto lending giant Celsius became the first to do so on June 13, also citing “extreme market conditions.”
Another digital asset lender, Babel Finance, has also suspended withdrawals and redemptions on its platform due to liquidity concerns.
Cryptocurrency broker Voyager Digital, on the other hand, reduced its daily withdrawal limit from $25,000 to $10,000, signaling a reduction of more than 50%. The update came shortly after the company revealed its total exposure to 3AC, valued at over $650 million in BTC and USDC.
Following the announcement, shares of Voyager plunged 60%. The company’s subsidiary is also considering legal action if Three Arrows Capital fails to repay its loan.
Finblox staking platform, another crypto firm exposed to 3AC, also adjusted its withdrawal limit to $1,500 per month from $500 per day and the distribution of rewards paused.
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