Crypto exchange CoinFLEX has demanded Blockchain.com to return the $4.3 million worth of 3,000,000 FLEX coins it borrowed last year or face legal action.
A February 24 notice recently obtained by Decrypt dictates that the Luxembourg-based financial services company has until March 7 to guarantee it will repay the debt. The notice also says Blockchain.com has until March 21 to deliver the funds.
If payment is not made by the deadline specified by CoinFLEX, “legal procedures” will be initiated against the exchange for the collection of overdue fees. After that, Blockchain.com would have 21 extra days to repay the funds — loaned between March and June last year.
The letter to Blockchain.com describes that the company has failed, rejected, and ignored repayment of “the 3,000,000 FLEX coins”. The demand is based on an AMM+ (automated market maker) Participation Agreement allegedly signed on April 12, 2022. The agreement’s existence, however, remains debatable to this day.
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
Per the legal letter, CoinFLEX plans to enforce its legal rights and will demand Blockchain.com the maximum interest and legally recoverable costs.
In response, Blockchain.com informed Decrypt that the claim was totally false, saying that CoinFLEX had delivered no evidence, documentation, or on-chain data to support its claims.
Blockchain.com added that CoinFLEX’s claim is without basis and is “a work of fiction” from an insolvent firm currently being sued by its clients for dissolution. It further said that CoinFLEX instead owes Blockchain.com for services that are now underpaid and that collection will begin soon.
Since August of last year, the centralised exchange has been in reorganisation procedures in a Seychelles court to raise $84 million to settle its debt.
Likewise, Blockchain.com is also facing financial challenges. The company needs to address a $270 million deficit on its balance sheet, which came from providing funds, both in cash and crypto, to the insolvent hedge fund Three Arrows Capital (3AC).