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OPNX gets EU spot crypto trading license in Lithuania

Kyle Davies’ and Su Zhu’s OPNX exchange acquired a Lithuania virtual asset license to offer spot trading in the EU.

Crypto exchange OPNX has obtained a virtual asset service provider license (VASP) in Lithuania, allowing it to provide spot crypto exchange services throughout the European Union, according to a Nov. 8 announcement seen by Cointelegraph.

OPNX trading interface. Source: OPNX

The announcement stated that this license would require the exchange to “adhere to the highest standards of compliance and security.” The team claims they have already implemented a “robust” Know Your Customer and Anti-Money Laundering system to ensure they comply with EU regulations.

“Securing the VASP license from Lithuanian authorities is a significant milestone in OPNX’s worldwide expansion and our mission to serve crypto users across the globe,” said OPNX CEO Leslie Lamb.

In a conversation with Cointelegraph, Lamb clarified that some OPNX services may still be unavailable in some jurisdictions within the EU. “This license gives us the ability to service the European region, but there are specific jurisdictions within the EU that do require specific licenses as well in order to operate certain services,” she stated, adding that OPNX is currently attempting to acquire those licenses. However, the current license will allow OPNX to provide spot trading services throughout the EU, with other services becoming available as further licenses are acquired.

Related: 3AC founders’ OPNX exchange claims to be funded by AppWorks, SIG

OPNX has been a controversial exchange since its inception. It was founded by Kyle Davies and Su Zhu, who also founded bankrupt crypto hedge fund Three Arrows Capital (3AC), along with Mark Lamb and Sudhu Arumugam, who founded bankrupt crypto exchange CoinFLEX. Because of its association with these prior bankruptcies, OPNX critics have claimed the exchange is unsafe to use. However, the exchange claims that it is helping bankruptcy creditors by allowing them to sell bankruptcy claims and get paid faster.

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CoinFLEX to begin arbitration for $84 million recovery and open limited withdrawals

CoinFLEX is moving quickly to retrieve as much liquidity as it can from a debacle that has left it $84 million short due to a delinquent account held by an unnamed whale.

Crypto investment platform CoinFLEX is moving forward with its plan to reclaim $84 million in funds by starting arbitration procedures in Hong Kong against an individual account holder.

Co-Founders Sudhu Arumugam and Mark Lamb acknowledged in their July 9 announcement that the judgment would provide access to the individual’s “worldwide assets” and that their lawyers were “very confident” they could enforce the award.

“We have commenced arbitration in HKIAC for the recovery of this $84m as the individual had a legal obligation under the agreement to pay and has refused to do so.”

The firm, however, noted the process could take 12 months to get a judgment in Hong Kong.

“Thereafter, we will be able to enforce that judgment against his worldwide assets,” it added.

Though the “large individual customer” was not named in the Saturday announcement, Lamb has previously publicly stated that Bitcoin Cash (BCH) proponent Roger Ver was the defaulting customer in question.

Ver, however, has denied that he owes any money to the firm. He fired back at the rumors by stating that an unnamed counterparty owes him “a substantial sum of money.”

In the most recent update, Arumugam and Lamb said that the individual was “wasting time” by promising to replenish his account with funds that never arrived.

They added that liquidating his positions created significant slippage, which has increased the sum the firm says he owes. Initial estimates put the outstanding sum at $47 million, but that amount was increased to $84 million after liquidating his FLEX token positions.

FLEX is the native token of the CoinFLEX platform.

“Unfortunately, this customer failed to honor his obligations pursuant to this written agreement. Our lawyers believe that we have a very strong case and have commenced legal actions to recover debts owed to us pursuant to this agreement.”

Limited withdrawals soon?

Amid the drama between CoinFLEX and the individual whale depositor, withdrawals have been suspended since June 23. Lamb said he hoped to have them back up for users by the beginning of July.

Arumugam and Lamb stated that they now have plans to create “temporary liquidity for CoinFLEX depositors” by initially making 10% of their account balances available for withdrawal.

No date has been set for this to take place, but the duo expect withdrawals to take a week or less.

CoinFLEX has been working on ways to make up for the shortfall in funds left by the whale investor’s account.

The firm indicated at the end of June that in addition to liquidating accounts and pursuing legal action, part of its funds recovery plan involved issuing 47 million Recovery Value USD (rvUSD) tokens which can be bought for $1 each. It may also offer some depositors the option to roll their deposits into equity in the company.

The firm is in “close discussions” with an unnamed large US exchange to enter into a partnership that could help boost CoinFLEX’s viability.

Related: Not all investments lose value equally: A recovery period for digital assets

The price of FLEX Coin fell 71% on July 9 following the announcement to $0.27. It is currently trading at $0.30, according to CoinGecko.

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CoinFlex CEO says withdrawals unlikely to resume on Thursday

CoinFlex CEO Mark Lamb said more time was needed before the exchange can reopen its platform for user withdrawals.

Crypto exchange CoinFlex is “unlikely” to resume withdrawals on Thursday, June 30 as it had originally hoped, according to its CEO Mark Lamb, as the company continues to search for buyers of its $47 million bad debt. 

Speaking to CNBC on Wednesday, Lamb said more time was needed before it could reopen the platform for withdrawals, stating:

“We will need more time. And it’s unlikely that withdrawals will be re-enabled tomorrow.”

The crypto exchange had been banking on a $47 million token offering launched on Tuesday, June 28 which is known as Recovery Value USD (rvUSD). The token offering was created in an attempt to sell off its bad debt after one of its accounts went into negative equity.

In a statement on Tuesday, the company said it hoped withdrawals could restart as previously planned for Thursday, June 30, but admitted it would be subject to the token issuance being fully subscribed.

The company has not given any updates as to how many tokens have been subscribed to date, but Lamb noted on Wednesday that CoinFlex is in talks with several large funds to buy up the $47 million debt.

In a separate interview to MarketWatch, Lamb said it has been making “significant progress” on its token sale amongst distressed debt funds, existing customers and investors, adding that tens of millions of dollars in “soft commitments” have emerged.

The crypto investment platform halted user withdrawals on Thursday, June 23 citing “extreme market conditions” and “uncertainty around a certain counterparty,” which was later revealed to be the result of a long-time customer of CoinFlex’s account that went into negative equity.

Days later, CoinFlex CEO Mark Lamb publicly pointed the finger at “Bitcoin Jesus” Roger Ver on Twitter, claiming that Ver owes the company $47 million USDC after allowing his account to go into negative equity.

Related: Roger Ver denies CoinFLEX CEO’s claims he owes firm $47M USDC

On the same day, Ver — without mentioning CoinFlex by name — denied rumors that he “defaulted on a debt to a counter-party,” and instead alleged the crypto firm owed him “a substantial sum of money.” Ver was an early investor in the exchange and had favorable borrowing conditions.

Lamb continued their Twitter spat stating the “debt is 100% related to his account,” adding that his company “categorically denies that we have any debts owing to him.”

CoinFlex’s recent woes are just another example of a growing number of crypto investment firms and trading platforms facing liquidity issues amid an ongoing crypto bear market.

Crypto lending platform Celsius Network is staring down possible bankruptcy, whilst crypto hedge fund Three Arrows Capital has just been served a notice of default by Voyager Digital. It has also reportedly been ordered to liquidate by a court in the British Virgin Islands.

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CoinFLEX recovery plan includes tokenized bad debt and more yields

The crypto lender issued a no-liquidation account to an unnamed whale on the condition that the account would never go negative, but that plan has backfired.

Crypto investment platform CoinFLEX aims to rectify its liquidity shortage and restart user withdrawals by selling off bad debt through a new $47 million token offering.

The new token is known as Recovery Value USD (rvUSD) and will be worth $1 each. It is designed to help CoinFLEX recover $47 million in losses incurred by an account that was allowed to reach negative equity without being liquidated. It will be issued from June 28 through July 1, and the firm stated that it hopes to resume withdrawals by June 30.

While the identity of the individual whose account went negative is still unknown, CoinFLEX CEO Mark Lamb insisted in a June 27 announcement that the individual “is a high-integrity person of significant means.” What is known is that in a June 23 blog post, Lamb blamed the individual’s bad debt for halting withdrawals.

Under normal circumstances, the crypto lender liquidates accounts before they reach zero equity. However, Lamb explained that in this instance, CoinFLEX opened a one-of-a-kind “non-liquidation recourse account” wherein it agreed to not liquidate the account, and the borrower agreed to keep it filled with plenty of equity.

Things did not go according to plan as the account went negative, allegedly causing a liquidity crunch at the firm. Lamb added that this account was the only one on CoinFLEX with negative equity.

rvUSD will be issued to non-US resident “Sophisticated Investors” at a minimum subscription of $100,000 per investor. Investments come with a 20% annual percentage rate paid in rvUSD.

A Sophisticated Investor is one who has an annual income of at least $200,000, a total net worth of at least $1 million, and has performed the Know Your Customer (KYC) procedure on CoinFLEX.

In order to prevent this from happening again, Lamb stated that he would not issue that type of account anymore. His firm will also expand its transparency by making public the notional USD value of every account’s futures positions through an external auditing firm.

In an interview on Bloomberg Technology with host Emily Chang on June 27, Lamb expressed his company’s belated need for more transparency. He feels that his firm should emulate the transparency that major decentralized finance (DeFi) firms have come to exemplify. He said, “We need to do at least as good as, if not, much better than DeFi with respect to transparency.”

“It has a damage to privacy, but we think that traders are going to find that worthwhile for the additional comfort that they get from knowing the risk and the leverage implicit in the system.”

CoinFLEX is just the latest in a growing list of centralized financial institutions and investment firms in crypto that have faced public criticism for potential insolvency. Most notable among this beleaguered group is Three Arrows Capital, led by Su Zhu and Kyle Davies, the Celsius crypto lending platform led by Alex Mashinsky, and crypto lender BlockFi led by Zac Prince.

Related: Crypto exchange FTX is looking into acquiring Robinhood: Report

CoinFLEX’s native token, FLEX Coin (FLEX), has taken a beating over the past four days by dropping 77% to $0.99 as of the time of writing, according to CoinGecko.

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