CoinFLEX Becomes the Latest Crypto Exchange to Halt Withdrawals

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Futures cryp­tocur­ren­cy exchange Coin­FLEX has paused all with­drawals on the plat­form as a result of the cur­rent extreme mar­ket con­di­tions and issues involv­ing a counterparty.

3AC Not the Cause of CoinFLEX’s Suspension

Coin­FLEX CEO Mark Lamb announced the news in a blog post on Thurs­day (June 23, 2022), which reads:

“Due to extreme mar­ket con­di­tions last week & con­tin­ued uncer­tain­ty involv­ing a coun­ter­par­ty, today we are announc­ing that we are paus­ing all with­drawals. We ful­ly expect to resume with­drawals in a bet­ter posi­tion as soon as pos­si­ble. We will ful­ly com­mu­ni­cate with you as we find out more.”

In addi­tion, Coin­FLEX is sus­pend­ing all per­pet­u­al and spot trad­ing of its FLEX coin in the short term. Mean­while, the com­pa­ny said a new update is to be released on June 27, while with­drawals are esti­mat­ed to resume on June 30.

While the blog post does not name the coun­ter­par­ty involved, Lamb clar­i­fied that the anony­mous enti­ty is nei­ther cryp­to hedge fund Three Arrows Cap­i­tal (3AC) nor any lend­ing platform.

Ear­li­er in June, there were insol­ven­cy rumors sur­round­ing Three Arrows Cap­i­tal. Short­ly after, the Sin­ga­pore-based hedge fund saw its long posi­tions liq­ui­dat­ed as cryp­tocur­ren­cy prices tumbled.

The firm also pur­chased $200 mil­lion worth of LUNA, an invest­ment that turned sour fol­low­ing the plum­met in the val­ue of Terra’s native token. Amid the trou­bles sur­round­ing 3AC, the company’s exec­u­tives are con­sid­er­ing sev­er­al options, such as asset sale or a bailout.

Mean­while, Coin­FLEX CEO is opti­mistic that things could go back to nor­mal, saying:

“We are con­fi­dent that this sit­u­a­tion can be repaired ful­ly with a restora­tion of all func­tion­al­i­ty, name­ly withdrawals.”

Ripple Effect of the Crypto Bear Market

Coin­FLEX is the lat­est cryp­to com­pa­ny to halt with­drawals this June. Cryp­to lend­ing giant Cel­sius became the first to do so on June 13, also cit­ing “extreme mar­ket conditions.”

Anoth­er dig­i­tal asset lender Babel Finance also paused with­drawals and redemp­tions on its plat­form because of liq­uid­i­ty issues.

Cryp­tocur­ren­cy bro­ker Voy­ager Dig­i­tal, on the oth­er hand, cut down its dai­ly with­draw­al lim­it from $25,000 to $10,000, sig­nal­ing a more than 50% reduc­tion. The update came short­ly after the com­pa­ny revealed its total expo­sure to 3AC, val­ued at over $650 mil­lion in BTC and USDC.

Fol­low­ing the announce­ment, Voyager’s shares plunged 60%. The company’s sub­sidiary is also con­sid­er­ing legal steps to take if Three Arrows Cap­i­tal defaults in repay­ing its loan.

Stak­ing plat­form Fin­blox, anoth­er cryp­to firm with expo­sure to 3AC, also adjust­ed its with­draw­al lim­it to $1,500 month­ly from $500 dai­ly and paused rewards distribution.

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