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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