CoinFlex is preparing to tackle the company’s liquidity crisis through arbitration in Hong Kong to recover $84 million in losses. Sudhu Arumugam and Mark Lamb, the co-founders of CoinFlex, said they are looking at recovering the losses from a large individual customer – prominent Bitcoin evangelist Roger Ver.
The person allegedly defaulted on repayment last month and failed to honour a contract with CoinFlex requiring him to guarantee any negative equity on his account. The company had highlighted the said customer’s failure to cover a debt that forced the company to suspend withdrawals in late June.
The co-founders, in a blog post, explained that users on manual margin have a grace period to send more collateral in support of their positions prior to it being liquidated. Ver had to personally indemnify CoinFlex for shortfalls in his account following the liquidation of his positions. But he failed to honour his obligations. Legal advisors believe CoinFlex has a strong case. As such, the company has commenced legal actions to recover its debts. The blog post says that CoinFlex has set the arbitration in Hong Kong International Arbitration Center (HKIAC) for the recovery of $84 million. Ver’s liability to pay is a personal liability meaning that he is liable to pay the total amount.
It is noted that the arbitration process is not a quick process. CoinFlex estimates that it will take about 12 months prior to getting the judgement. Then the company will enforce the judgement against Ver’s worldwide assets. CoinFlex’s primary assets are in FLEX Coins, which the company holds – around 26 million-plus units – in its inventory. The co-founders are concerned about the price of the FLEX coin being volatile. This may have implications on the value of the collateral of other customers.
CoinFlex believes recovery of the debt will help build confidence and help shore up the trading price of FLEX Coin.