CoinFLEX Pauses Withdrawals Amid 'Extreme Market Conditions' and Counterparty Uncertainty

Physical futures crypto exchange CoinFLEX is pausing withdrawals citing "extreme market conditions" along with uncertainty around a certain counterparty, its CEO Mark Lamb said in a blog post Thursday. CoinDesk reports: Lamb said the counterparty is not Three Arrows Capital or "any lending firm." CoinFLEX expects to resume withdrawals "in a better position as soon as possible." Additionally, FLEX Coin trading is being halted for perpetual swaps and spot trading in the short term.

"As Soon As Possible"

[splutty]

Translation: We can go bankrupt once our primary benefactors get their money out, as long as we don't have to pay out the plebs.

Re:"As Soon As Possible"

[Registered Coward v2]

Translation: We can go bankrupt once our primary benefactors get their money out, as long as we don't have to pay out the plebs.

Exactly. The lack of liquidity was overlooked by cryptocurrency fans who may find out their millions have vanished into the ether...

Re:"As Soon As Possible"

[Zontar_Thing_From_Ve]

Translation: We can go bankrupt once our primary benefactors get their money out, as long as we don't have to pay out the plebs.

There may be more to it than this. This is what we have learned about crypto due to the recent problems.
1) Very large investors, like people who dump over $100 million into an exchange, can withdraw their money after they have made enough of a profit and the sheer number of transactions needed to cash out can do massive harm to specific crypto currencies and/or exchanges.
2) The hugely inflated values of so many crypto currencies weren't backed by enough assets for everybody to cash out in probably every exchange there is. For example, exchange A may on paper have $10 billion in crypto assets in their ecosystem but in reality if everybody cashed out at once, they might only have, say, $100 million in real dollar assets to pay people off with.

Re:

[Train0987]

The word you're looking for is insolvent. Every exchange is insolvent.

Re:

[h33t l4x0r]

Every exchange that does futures and settles in cash is insolvent I guess. The big ones are probably fine. There's a tendency to catastrophize when these edge marketplaces get weird and I can understand that, but the sky is not falling.

Re:

[splutty]

It's pretty much impossible for an exchange to have enough assets backing their crypto, because they can not control the value of crypto in any way.

If they have 100 shitcoins, and those go from $10 (to $100 they now need somehow to have 10 times the asset value to cover those.

That's just not going to happen, unless they started at 10 times the asset value to begin with, but I don't know of *any* exchange that has the amount of asset/liquidity to even get close to having a volatility buffer.

Re:

[DrXym]

Also, the whole thing is a crowd sourced ponzi with a garnish of scams on top. The people with the money got out while they could leaving the rubes exposed.

Those who fail to understand Unix^H^H^H^HFinance

[istartedi]

So much of crypto is finance reinvented poorly. You know equity options? There's a thing called the "Options Clearing Corporation". Among other things, its job is to make sure that counter parties make good on contracts. So when you sell cash secured puts, your broker makes damn sure you've got enough cash because the OCC makes damn sure that brokers don't let customers write cash secured puts without CASH. For the riskier margin accounts, there are also standards that lead to the infamous margin calls, and probably some other form of insurance sufficient to make sure that the entire equity options market doesn't come crashing down. Oh and I'm pretty sure this stuff is all audited.

The crypto equivalent of that? Sound of crickets.

Re:Those who fail to understand Unix^H^H^H^HFinanc

[tlhIngan]

So much of crypto is finance reinvented poorly. You know equity options? There's a thing called the "Options Clearing Corporation". Among other things, its job is to make sure that counter parties make good on contracts. So when you sell cash secured puts, your broker makes damn sure you've got enough cash because the OCC makes damn sure that brokers don't let customers write cash secured puts without CASH. For the riskier margin accounts, there are also standards that lead to the infamous margin calls, and probably some other form of insurance sufficient to make sure that the entire equity options market doesn't come crashing down. Oh and I'm pretty sure this stuff is all audited.

What you call "standards", DeFi calls "regulations". Deregulated Finance is all about not having regulations, because regulations are bad.

See, in a regulated finance scenario, the people at the top would be at risk of losing a bit of money so the people at the bottom can get their money back. With DeFi, the people at the top can make out with all the money - screw the little person at the bottom - they never mattered in the first place. Thus, regulations are bad (for the people at the top).

Re:

[h33t l4x0r]

I'm sure you don't really care but the crypto equivalent is smart contracts.

Cryptocoins serve no useful purpose

[zeeky boogy doog]

They are somewhere between securities fraud and a self-organizing ponzi scheme, and the only non-crime reason to mine them is because you hate earth and want to contribute to global warming.

https://www.youtube.com/watch?... [youtube.com]

Crypto stampede

[khchung]

One more bank run. How long until the stampede begins?

All your crypto are belong to us .. for now

[thesjaakspoiler]

When Bitcoin hits $200,000 next year as Max Keiser predicted, everybody will forget this hickup.

Another pyramid about to collapse

[misnohmer]

All Ponzi schemes fail when they run out of new customers funding the previous levels of the pyramid. Freezing withdrawals (but not deposits) is a desperate attempt at keeping the pyramid from collapsing by hoping you can find enough new suckers to cover all who want to cash out. Unfortunately such a move tends to make more people nervous and want to withdraw, so it all comes crashing down. Just ask Bernie Madoff.

Re:

[account_deleted]

Comment removed based on user account deletion