CoinFLEX co-founder and CEO Mark Lamb said Roger Ver chose to betray CoinFLEX associates and users.
Lamb posted a video recounting his thoughts on CoinFLEX being driven to near bankruptcy by Ver, adding that brutal lessons have been learned.
CoinFLEX restructuring approved
In June 2022, CoinFLEX said it was owed $47 million from Ver due to margin losses accrued to his trading account. Lamb explained that the company has a written agreement with Ver personally guaranteeing negative trading balances.
The agreement required Ver to top up his balance, but he failed to do so, leaving a black hole in the exchange’s books. The Bitcoin Cash proponent denied any wrongdoing and flipped the situation on its head, saying CoinFLEX owes him money.
“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.”
In July 2022, the exchange revised its initial estimate to $84 million owed, adding that it seeks to recover the money through the courts.
The following month saw the exchange file for restructuring – which was approved by the Seychelles Court some seven months later in March.
The deal will see Lamb team up with Three Arrows Capital co-founders Su Zhu and Kyle Davis – with CoinFLEX rebranding to OPNX – an exchange specializing in tokenizing bankruptcy claims.
Lamb gives his story
With restructuring approved and winning “more than 20 different court cases” against Ver, Lamb took to social media recently to explain what happened.
On the matter of lending money to Ver/funding his trading losses with customer funds, the CoinFLEX CEO said this is not what happened – implying that the incident boiled down to deceitful behavior on the part of Ver.
He explained that it is standard practice for some crypto exchanges to have “manual margin” accounts for VIP entities. These types of trading accounts provide a period of grace, such as a day, before a losing account, past its margin limit, gets liquidated.
It is common for manual margin accounts to be secured by external collateral, liens, personal guarantees, and other forms of backing.
Disputing accusations of lax risk management, Lamb said he had a written manual margin agreement with Ver, which he failed to honor.
Moreover, he suggested that the circumstances were difficult to swallow, given that the pair were close friends going back 11 years – having first met in the early Bitcoin days.
Lamb continued, saying in the course of building CoinFLEX and developing its product lineup; he often consulted with Ver in a mentor and investor capacity. Over time, Ver ended up owning more CoinFLEX equity than Lamb.
“It felt to me like he was a deeply involved business partner that we could rely on…”
Lamb said despite CoinFLEX owing a great deal of its history and early success to Ver, he “chose to betray the trust of so, so many people.”