One of the difficulties of cryptocurrency is figuring out who to believe. Case in point: the conflict between Mark Lamb, CEO of CoinFlex, and Roger “Bitcoin Jesus” Ver, an early Bitcoin investor. Lamb says Ver owes his company $47 million and is the reason the company froze customer withdrawals last week. Ver denies this and says that, in fact, CoinFlex owes him money.
Well, things have gotten worse
CoinFlex, an exchange, froze withdrawals on June 27th, saying that it would restart withdrawals on June 30th with one condition: CoinFlex needs to sell tokens related to a debt owed by a “certain high net worth individual.” (The company did not initially name Ver.)
Eleven days ago, we pointed out a few crypto firms with problems that could cause further ripples throughout the industry and noted that things may get worse. Well, things have gotten worse. Uncertainty over crypto has reached a point where The Wall Street Journal reports hedge funds have begun to bet hundreds of millions of dollars that Tether will fall — which is odd, because Tether, as a stablecoin, theoretically has a set value of $1. Paolo Ardoino, the CTO of both Tether and the crypto exchange Bitfinex, called the short-selling attempts a coordinated attack to go along with “a new wave of FUD.”
Since then, Three Arrows Capital has also been named in default of loans worth around $670 million, the Celsius Network still has no timeline to restore withdrawals, and Babel Finance said it has “reached preliminary agreements on the repayment period of some debts.”
Ver’s alleged involvement here underscores the connections among cryptocurrency enthusiasts, exchanges, and lending platforms. Ver invested early in Bitcoin and related startups like BitPay before advocating for Bitcoin Cash as it emerged from a fork in the blockchain.
CoinFlex’s tokens, called rvUSD, promise a 20 percent APR, which is awfully high. (That already seemed unbelievable even before Ver denied he owed anything at all.) They are not available to investors in the US. Still, the token — the “rv” in rvUSD theoretically stands for “recovery value” — seems to refer to his initials.
“Notably, the individual had consistently met every margin call before this incident,” the paper says. It referred to this person as a “high integrity person of significant means, experiencing temporary liquidity issues due to a credit (and price) crunch in crypto markets (and even non-crypto markets) who has significant shareholdings in several unicorn private companies and a large portfolio.”
Those interested must purchase a minimum of $100,000, paying for rvUSD in USDC. People who hold rvUSD will theoretically be able to convert to USDC, another stablecoin worth a dollar, as the debt is repaid. Well, okay, but what if it isn’t repaid? Then, in October 2023, investors will be paid USDC from CoinFlex’s balance sheet or in a mix of USDC and Flex coins, which CoinFlex calls “the cornerstone of the CoinFlex ecosystem.”