E Amazings
  • Home
  • Automotive
  • Business
  • CBD
  • Crypto
  • Education
  • Entertainment
  • Fashion
  • Finance
  • Health
  • Home Improvement
  • Law \ Legal
  • News
  • Shopping
  • Sports
  • Technology
  • Travel

Subscribe to Updates

Get the latest creative news from FooBar about art, design and business.

What's Hot

Multas a los vendedores ambulantes aumentaron durante el primer año del DCWP

August 9, 2022

Ashish Kacholia stock: This packaging company’s shares hit new lifetime high on Monday; brokerages recommend Buy – check price target

August 9, 2022

Stock Markets: REVEALED! Why world economies fearing recession but India is emerging even stronger

August 9, 2022
Facebook Twitter Instagram
E Amazings
  • Home
  • Automotive
  • Business
  • CBD
  • Crypto
  • Education
  • Entertainment
  • Fashion
  • Finance
  • Health
  • Home Improvement
  • Law \ Legal
  • News
  • Shopping
  • Sports
  • Technology
  • Travel
Facebook Twitter Instagram
E Amazings
You are at:Home»Crypto»Roger Ver’s Debt Part of the Reason for CoinFLEX’s Collapse: Report
Crypto

Roger Ver’s Debt Part of the Reason for CoinFLEX’s Collapse: Report

Paul EasterBy Paul EasterJuly 26, 2022No Comments3 Mins Read
Facebook Twitter Pinterest LinkedIn Tumblr Email
Share
Facebook Twitter Pinterest WhatsApp Email



After CoinFLEX made headlines with “Bitcoin Jesus” Roger Ver over a dispute over Ver purportedly failing to pay $47 million in margin calls, Wu Blockchain disclosed more details regarding the collapses in its latest blog post.

The beleaguered exchange did not liquidate Roger Ver’s position in time, noted Wu – an indicator of its poor risk management that contributed to the fallout of its whole ecosystem, with digital tokens FLEX and FlexUSD both crashing.

The Making of A Death Spiral

According to a source acquired by Wu Blockchain, CoinFLEX had reportedly made an agreement with Roger Ver before the market collapsed, allowing the high-net-worth client to use his “personal creditworthiness” as a guarantee that his account would not be immediately liquidated even though it had fallen below the maintenance margin. Instead, Ver would have more time to meet the relevant margin requirements.

The trade involved a $47M loss from Ver starting from a long position on CoinFLEX with a margin of BCH, which then sat at $400. However, when the market went south rapidly in the past months, resulting in a liquidity crisis in the exchange, the price of BCH declined to roughly $120. This meant that Ver’s position was far below the maintenance margin.

Given its native token FLEX free falling in value, the exchange decided to use its stablecoin FlexUSD to buy a large amount of FLEX  from the secondary market to prop up its prices while opening a short position to hedge the spot price. Nonetheless, the one who lent out all the FLEX tokens for the exchange to sell came from Roger Ver.

Wu’s post explains:

“This meant that if Roger Ver defaulted on his margin, CoinFLEX’s position would not be profitable and would then be equivalent to a net long position in a large amount of FLEX spot. So, when the withdrawal restriction announcement was made, CoinFLEX’s total funds began to fall in a cyclical fashion.”

Under this circumstance, the FlexUSD price trading at less than $0.30 today is in a death spiral.

Exacerbated Conflicts

Considering that Ver provided liquidity for CoinFLEX to short its token as no one, at that circumstance, would have wanted to be the exchange’s counterparty, Roger Ver, by Wu’s estimates, was responsible for around $90M out of CoinFLEX’s total loss of $120 million. It consists of losses from the de-peg of the stablecoin and the collapse of the SmartBCH cross-chain bridge.

Wu’s source also revealed that the BCH proponent had admitted to default margin payments but did not “have enough cash flow on hand to consider using shares (of companies like Blockchain.com or Kraken) as collateral in lieu of margin.” Later, CoinFLEX CEO Mark Lamb took the matter online when two parties were negotiating, accusing Bitcoin Jesus of defaulting on $47M debt.

The root cause of this debacle stems from not only Roger Ver’s default but also CoinFLEX’s poor risk management, Wu concluded, at the expense of users on CoinFLEX and SmartBCH. Regarding the exchange’s prospect, Wu said, it could “gradually make up the shortfall with the revenue from trading fees alone” due to its profitability, even though Roger Ver is unable to repay its debts, added Wu.

SPECIAL OFFER (Sponsored)

Binance Free $100 (Exclusive): Use this link to register and receive $100 free and 10% off fees on Binance Futures first month (terms).

PrimeXBT Special Offer: Use this link to register & enter POTATO50 code to receive up to $7,000 on your deposits.



Source link

Paul Easter

Related Posts

Vitalik Outs Himself as Having Used Tornado Cash

By Paul EasterAugust 9, 2022

Earn Rewards Through Crypto’s Piggy Bank

By Paul EasterAugust 9, 2022

Tether Announces Support for Ethereum Proof of Stake Transition

By Paul EasterAugust 9, 2022

Crypto Prices Found a Floor Because of Ethereum’s Merge, JPM Says

By Paul EasterAugust 9, 2022
Add A Comment

Comments are closed.

Our Picks

Multas a los vendedores ambulantes aumentaron durante el primer año del DCWP

By Paul EasterAugust 9, 2022

Ashish Kacholia stock: This packaging company’s shares hit new lifetime high on Monday; brokerages recommend Buy – check price target

By Paul EasterAugust 9, 2022

Stock Markets: REVEALED! Why world economies fearing recession but India is emerging even stronger

By Paul EasterAugust 9, 2022
Recent Posts
  • Multas a los vendedores ambulantes aumentaron durante el primer año del DCWP August 9, 2022
  • Ashish Kacholia stock: This packaging company’s shares hit new lifetime high on Monday; brokerages recommend Buy – check price target August 9, 2022
  • Stock Markets: REVEALED! Why world economies fearing recession but India is emerging even stronger August 9, 2022
  • This American tech company joins ONDC in major boost to government’s effort to reshape e-commerce landscape August 9, 2022
  • 91% JUMP! Life insurers’ new premium income rises to Rs 39,079 cr in July 2022 August 9, 2022
  • AP CFW MLHP Recruitment 2022: Jobs alert! Vacancies notified at cfw.ap.nic.in – How to apply online; know salary August 9, 2022
  • Student Competition Badge Bears Custom Silicon August 9, 2022
Archives
  • August 2022
  • July 2022
  • June 2022
Facebook Twitter Instagram Pinterest TikTok
  • Home
© 2022 E Amazings - All Rights Reserved.

Type above and press Enter to search. Press Esc to cancel.