One of Crypto's Biggest Names Has Defaulted on $47 Million USDC Debt, Coinflex Says

One of Crypto’s Biggest Names Has Defaulted on $47 Million USDC Debt, Coinflex Says

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Chief executive of crypto exchange CoinFlex, Mark Lamb, said on Tuesday that he issued a notice of default to Roger Ver, an early crypto investor and chief executive of Bitcoin.com, alleging that Ver n failed to respond to a margin call and owed the exchange $47 million USDC.

Lamb made the comments on Twitter after Ver tweeted tuesday rumors that he defaulted on a debt to a counterparty are false. “Not only am I indebted to this counterparty, but this counterparty owes me a substantial amount of money, and I am currently seeking the return of my funds,” Ver wrote. Ver did not identify the counterparty.

Ver pointed to GameSpot at the tweet after being asked to comment.

CoinFlex has halted user withdrawals since June 23 citing a customer’s negative account balance, according to a Monday blog post. The company issued $47 million worth of tokens called Recovery Value USD on Tuesday, in a bid to resume withdrawals, according to the post.

CoinFlex representatives did not immediately respond to emails seeking comment.

The dispute arose as major cryptocurrencies BTCUSD,
-3.19%

ETHUSD,
-4.05%
crashed and several crypto companies showed signs of trouble. Crypto lender Celsius has suspended withdrawals since June 12, while Three Arrows Capital, once one of the most active hedge funds in the space, defaulted on $667 million in loans from Voyager Digital.

“Under normal circumstances, we would automatically liquidate a position that lacks equity at prices prior to the zero equity price,” CoinFlex wrote in the Monday blog post. “In this case, the individual had a non-liquidation recourse account,” CoinFlex said. The contract required the individual to agree to strict personal guarantees regarding account equity and margin calls in exchange for not being liquidated, according to the post.

To re-enable withdrawals, CoinFlex on Tuesday issued a token called Recovery Value USD, or rvUSD, which is said to provide an APR of up to 20%. The exchange said it aims to resume withdrawals on June 30, but will be subject to receiving funds from the issuance of rvUSD.

Investors will be reimbursed upon collection of the debt by CoinFlex and have other exit options if the exchange cannot recover the full amount in 15 months, according to the token’s whitepaper.

“It’s a way for us to use tokenization to solve this problem,” Lamb said in an interview on Bloomberg TV. ” We believe [the individual] will give us the funds at some point in the future. And we wanted to make all the assets match, and everything match, in a way that’s market-based, and we transfer that risk to investors who understand what risk is and are impatient with that risk, and basically solve the problem,” Lamb said.

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