- CoinFlex is unlikely to resume customer withdrawals on Thursday as planned, its CEO told CNBC.
- The crypto exchange needs more time, he said, as it looks to recover from a $47 million bad debt.
- It's another sign of the growing debt-related pressures in the industry as crypto prices slide.
Crypto exchange CoinFlex needs more time to start resuming withdrawals by customers again, its CEO has said, as the company scrambles to find a solution to a $47 million bad debt.
The exchange froze withdrawals last week, citing "extreme market conditions" and "continued uncertainty involving a counterparty", after it accumulated millions of dollars in debt.
CoinFlex later said high-profile investor Roger Ver, also known as "bitcoin Jesus," owed it $47 million after allowing his account to go into negative balance. The crypto evangelist denies this, saying the exchange actually owes him money.
The exchange hoped to restart withdrawals Thursday, but said it would depend in part on take-up of the $47 million of recovery tokens it issued to fundraise the account shortfall. But its CEO Mark Lamb dampened those hopes on Wednesday.
"We will need more time. And it's unlikely that withdrawals will be re-enabled tomorrow," Lamb told CNBC.
CoinFlex is looking for buyers for the $47 million bad debt, he added. The company has had millions of dollars in "soft commitments" from distressed debt funds for its token sale, it told MarketWatch.
The exchange is the latest casualty of the crypto market crash that wiped off billions of dollars in value from the digital asset market, which recently fell below $1 trillion for the first time in 16 months.
Its troubles are another sign of the growing debt-related pressures in the industry as crypto prices slide, which has driven uncertainty about stability.
Troubled crypto hedge fund Three Arrows, also known as 3AC, entered liquidation under court order after it failed to meet margin calls from multiple lenders, the Wall Street Journal reported.
Before that, 3AC's problems in turn exposed Voyager Digital to financial woes, because it had lent the hedge fund $660 million.
Earlier in June, crypto lender Celsius also froze withdrawals and transfers as a result of conditions in the crypto market, leaving its customers anxious about their locked money.
That said, some experts believe the crypto pain is actually beneficial for the industry, as it will "stress test" newly built crypto infrastructure and weed out businesses without a solid base.
FTX CEO Sam Bankman-Fried told Forbes that some crypto exchanges that are secretly insolvent, as he warned more exchanges will soon fail.
The crypto billionaire has been described as crypto's lender of last resort after he loaned Voyager $485 million in cash and bitcoin, and bailed out struggling crypto lender BlockFi.
But in his remarks to Forbes published Tuesday, he said some crypto firms are not worth trying to rescue, given the amount of troubles they have.
"There are companies that are basically too far gone, and it's not practical to backstop them — for reasons like a substantial hole in the balance sheet, regulatory issues, or that there is not much of a business left to be saved," he said.