Does Blockchain.com Owe CoinFLEX Nearly $4.3M in FLEX tokens?

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Online publication Decrypt reports that cryptocurrency exchange CoinFLEX claims it gave the Luxembourg-based financial services business Blockchain.com a total of 3,000,000 FLEX coins last year and is now asking it to refund $4.3 million worth of FLEX coins or face legal action.

In response, Blockchain.com stated, “This is entirely incorrect.”

The notification, issued February 24, states that Blockchain.com has until March 7 to certify that it would return the FLEX coins, and it has until March 21 to transmit the money. Otherwise, CoinFLEX claims that the exchange will be subject to

The initiation of legal processes, including but not limited to a formal demand for payment known as a statutory demand.

According to the letter, Blockchain.com would then have a further 21 days to pay back the money, which is made up of four loans reportedly made between March and June of last year.

The letter to Blockchain.com claims that “You have failed, rejected, and/or ignored to reimburse the 3,000,000 FLEX coins that are long overdue to be repaid.” “Our client will naturally look to you for the highest amount of interest and fees that is attainable under law” if it must use legal action against you.

The demand is based on a Participation Agreement with an AMM+ (automatic market maker) that was purportedly signed on April 12, 2022, when Bitcoin was struggling at $40,000. It is contested whether or not such agreement really exists.

According to the Blockchain.com statement,

CoinFLEX has not offered any evidence, documentation, or on-chain data to verify its assertions.

A Singapore-based legal company by the name of Nine Yards Chambers LLC purportedly delivered the letter to Blockchain.com, and the notification cites CoinFLEX as one of its clients.

Blockchain.com stated that CoinFLEX’s claim was

totally without foundation and a work of fiction from an insolvent firm now being sued by its clients for dissolution. In truth, CoinFLEX owes Blockchain.com money for services done that haven’t been paid for yet; we’ll start collecting on it soon.

In a Seychelles court, CoinFLEX started restructuring procedures in August with the goal of raising $84 million to settle its own debt. CEO Mark Lamb and cofounder Sudhu Arumugam cofounded the exchange in 2019.

Lamb added, “We hope common reason will win out and that we will be paid the money we were promised.”

Blockchain.com, however, has its own financial difficulties. To close a $270 million hole on its balance sheet caused by cash and cryptocurrency it lent to insolvent hedge fund Three Arrows Capital, the company has been seeking to liquidate some of its assets (3AC).

Su Zhu and Kyle Davies, co-founders of 3AC, have lately been revealed to be Arumugam and Lamb’s business partners. The three of them are collaborating to launch a new company named Open Exchange (OPNX).

The four were seeking $25 million to launch the firm, according to a pitch deck that was leaked last month. It identified Open Exchange as a center for users looking to trade bankruptcy claims, particularly those pertaining to the several cryptocurrency businesses that failed last year, including the exchange FTX.

Several users of CoinFLEX’s official Telegram channel were angry over the disclosure. One user said, “You don’t want to be linked with 3AC. Give this some careful thought.”

When 3AC fell last summer, it was one of the biggest crypto-focused hedge funds. It filed for bankruptcy after suffering significant losses as a result of Terra’s UST stablecoin and LUNA governance token collapsing.

FLEX currency will be the “main token of the new exchange,” according to Zhu, who made the formal announcement of OPNX a few weeks after the pitch deck started to circulate.

13/ it is with humility that we announce the claims waitlist is now open, with site UI/UX beta testing coming very soon: https://t.co/uFZUNn9PBq

& for those who asked, yes $FLEX will be the primary token of the new exchange

— 朱溯 🐂 (@zhusu) February 9, 2023

According to the website of the exchange, FLEX currency was first introduced as the native token for CoinFLEX, offering “users with specific perks that [make] trading on CoinFLEX much better,” such as decreased costs.

Despite the coin’s recent 180% increase to $1.46 over the past 30 days, CoinGecko estimates that FLEX is still about 80% behind its all-time high of $7.56 in December 2021. CoinGecko also identifies CoinFLEX as the only centralized exchange that currently offers the token.

Lamb had already made a public complaint against CoinFlex’s lending methods, despite the fact that this most recent letter addressed to Blockchain.com is said to have been delivered to the firm discreetly.

Lamb said on Twitter that longtime Bitcoin supporter Roger Ver owed CoinFLEX $47 million worth of the stablecoin USDC and that a default notice had been filed a month after CoinFLEX blocked withdrawals in May of last year, citing “uncertainty concerning a counterparty.”

Roger Ver owes CoinFLEX $47 Million USDC. We have a written contract with him obligating him to personally guarantee any negative equity on his CoinFLEX account and top up margin regularly. He has been in default of this agreement and we have served a notice of default.

— Mark Lamb (@MarkDavidLamb) June 28, 2022

The following day, Ver refuted the accusations, claiming he was the one who was due “a large quantity of money” and was taking action to get the money repaid.

Recently some rumors have been
spreading that I have defaulted on a
debt to a counter-party. These rumors
are false. Not only do I not have a debt
to this counter-party, but this counter-
party owes me a substantial sum of
money, and I am currently seeking the
return of my funds.

— Roger Ver (@rogerkver) June 28, 2022

On the status of his disagreement with Ver, Lamb opted not to comment.

CoinFLEX declared in July of last year that users will be allowed to withdraw some money from the exchange, although in a restricted way, as Ver and Lamb’s dispute went on. Users could only withdraw up to 10% of their funds, and flexUSD, the platform’s stablecoin, was not included.

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