Crypto exchange CoinFlex’s chief executive Mark Lamb said Tuesday that it issued a notice of default to Roger Ver, an early crypto investor and chief executive at Bitcoin.com, alleging that Ver failed to meet a margin call and owes the exchange $47 million USDC.
Lamb made the comments on Twitter after Ver tweeted Tuesday rumors that he defaulted on debt to a counterparty are false. “Not only do I not have a debt to this counterparty, but this counterparty owes me a substantial sum of money, and I am currently seeking the return of my funds,” Ver wrote. Ver did not identify the counterparty.
Ver pointed MarketWatch to the tweet after being asked for comment.
CoinFlex has halted user withdrawals since June 23 citing the negative balance by a customer’s account, according to a Monday blog post. The company on Tuesday issued $47 million worth of tokens called Recovery Value USD, in an attempt to resume withdrawals, according to the post.
Representatives at CoinFlex did not immediately responded to emails seeking comment.
The dispute arose as major cryptocurrencies
crashed and several crypto companies showed signs of trouble. Crypto lender Celsius paused 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.
“In normal circumstances, we would auto-liquidate a position that runs low on 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 pledge stringent personal guarantees around 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 supposed to provide an APR of up to 20%. The exchange said it aims to resume withdrawals on June 30, but it will be subject to receiving funds from the rvUSD issuance.
Investors will be repaid upon CoinFlex’s recovery of the debt and will have other exit options if the exchange cannot reclaim the full amount in 15 months, according to the token’s white paper.
“It’s a way for us to use tokenization to solve this problem,” Lamb said in an interview on Bloomberg TV. “We do believe [the individual] is going to give us the funds at some point in the future. And we wanted to make it such that assets all match up, and everything matches up, in a way that is market-based, and we pass on this risk to investors that understand what the risk is and are eager for this risk, and basically solve the problem,” Lamb said.