CoinFLEX, the embattled digital asset futures exchange sent into chaos by Roger Ver, has announced that its proposed restructuring plan has been approved by the Seychelles courts.
The plan was initially proposed by CoinFLEX back in September 2022 as a way to keep ahead of a growing liquidity crisis. Under the plan, CoinFLEX creditors will own 65% of the company, while Series A investors would lose their equity stakes. Series B shareholders will retain their status.
The plan was approved by creditors in September, with 98.63% said to have been in support. It was then sent to the court of the Seychelles in late 2022 for approval.
Now approval has been given, CoinFLEX will begin the process of emerging from corporate reorganization.
CoinFLEX’s native FLEX token rose 21% on the news.
CoinFLEX’s troubles began when one of its VIP clients—BCH founder Roger Ver—defaulted on a $84 million debt and steadfastly refused to pay up. Ver had an ‘insider’ VIP account with CoinFLEX which meant that CoinFLEX had agreed not to liquidate the account in exchange for stringent personal guarantees around account equity and margin calls—an extension of trust that has seemingly turned out to be very large mistake as the account went on to accumulate $47 million in losses.
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
CoinFLEX pre-emptively justified Ver’s status on the basis that he was “a high integrity person of significant means, experiencing temporary liquidity issues due to a credit (and price) crunch in crypto markets” who had “consistently met every margin call before this incident.”
CoinFLEX eventually took legal action against Ver in Hong Kong seeking recovery of the debt. Ver, on the other hand, has insisted the debt does not exist and that it is actually CoinFLEX that owes him money.
However, Ver has proven himself to be something of an expert at evasion, and walking out on debts after getting liquidated is becoming something of a theme for Bitcoin Jesus.
In January, Genesis subsidiary GGC International filed a court summons in New York demanding that Ver pay at least $20 million to cover digital asset options he’d purchased which expired at the end of December. Ver’s response to GGC was the same as that given to CoinFLEX. In other words, he’s not paying for what he bought because it’s actually GGC that is in the wrong:
On the topic of #Genesis: https://t.co/2a0fYu5P3E pic.twitter.com/a6tA0HISMo
— Roger Ver (@rogerkver) January 25, 2023
No doubt there’s plenty to discover about the inner workings of Genesis and the broader Digital Currency Group empire. However, that’s now two separate multi-million-dollar debts incurred by Ver’s evidently reckless gambling, and he’s made clear he intends to pay neither of them.
It’s a bold strategy, but certainly on brand for Ver. The first public record of the BCH evangelist comes from his arrest and incarceration in federal prison in the U.S. Ver had pleaded guilty to using the U.S. postal service to mail explosives and served 10 months.
Ver subsequently made a name for himself as an ‘anarchist’ and early investor in the digital asset industry. He has made clear that he views the digital asset industry as an extension of his worldview:
Bitcoin was originally invented for crypto-anarchists, but has now become overrun by paternalistic autocrats https://t.co/wj0iXDyLq9
— Roger Ver (@rogerkver) November 14, 2016
Now facing legal action over two separate multi-million-dollar debts, it seems that Ver’s behavior is set to catch up with him.
In fact, the reckoning has already begun. Ver has spent years hopping the globe in trying to avoid a defamation suit over statements he’d made calling Dr. Craig Wright a liar and a fraud. This chase eventually brought Ver to Antigua, where Ver purchased citizenship. Unfortunately for him, Dr. Wright is also a citizen of the island nation and filed his defamation claim in that jurisdiction. Last week, the Antiguan court confirmed jurisdiction to hear the claim and it is expected that Ver will face trial over the suit.
Similarly, Ver did his best to avoid another lawsuit over the obligations he owes to those that use the BCH network. Together with a number of other blockchain engineers and entities, Ver was included in a lawsuit by Tulip Trading which argued that developers like Ver owe fiduciary and tortious duties to those who use their blockchains which would compel them to return access to lost or stolen assets to their legal owners. While most of the defendants rushed to defend the claim, Ver initially did not respond and eventually appeared only to bolt his own defense onto that of the other defendants. The U.K. Court of Appeal recently gave the claim its rubberstamp in a landmark judgment, and it is now expected to go to trial.
Whether Ver’s reluctance to face the proverbial music really is a consequence of his anarchist leanings or a sign of insolvency is an open question. One might think that a man notorious for his early involvement in the industry would have an abundance of funds with which to cover his debts and meet his accusers in court. However, routinely running up tens of millions of dollars’ worth of debt is hardly conducive to preserving wealth, and who knows how many other entities Ver is deep in the hole with. Add to that the fact that many of Ver’s digital asset investments have been battered by the overall downturn in the market and the prospect of fighting multiple major lawsuits at once, and one wonders how much track Ver has left in front of him.
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Ethereum, FTX and Tether—who have co-opted the digital asset revolution and turned the industry into a minefield for naïve (and even experienced) players in the market.
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