In a revelation delivered to light by an account on X (formerly Twitter) under the name “CoinFLEX Real,” allegations have emerged indicating that the founding father of CoinFLEX, a derivatives exchange based in Hong Kong, together with their partners at Three Arrows Capital (3AC), have allegedly engaged within the misappropriation of creditor assets for private gain.
Mark Lamb, the founder of CoinFLEX, together with Zhusu and Kyle Davies of 3AC, stand accused of utilizing funds entrusted to them as their personal “piggy bank.”
CoinFLEX Founder Accused Of Manipulation
CoinFLEX suffered significant losses, amounting to $160 million, resulting in its collapse in June 2022, triggered by a negative balance from one in every of its customers, Roger Ver. Subsequently, a group of creditors developed a restructuring proposal to revive the exchange.
In September 2022, CoinFLEX’s leadership presented a restructuring plan that granted creditors a majority stake and control of the board. The corporate retained $10 million to finance litigation against Roger Ver and facilitate a reboot.
Nevertheless, in January 2023, Mark Lamb suddenly established a separate exchange called OPNX, seemingly unrelated to CoinFLEX. Despite this, the exchange’s funds supported OPNX’s operations.
Mark allegedly misled regulators by presenting OPNX as a part of CoinFLEX and manipulated FLEX tokens for “personal profit.” The brand new enterprise heavily relied on CoinFLEX’s technology, funds, staff, and the FLEX token.
CoinFLEX’s website even encouraged users to migrate to OPNX despite the shortage of authorization to develop this latest business, which contradicted the terms of the restructuring order pending approval by the Seychelles courts.
Over the next six months, CoinFLEX stakeholders received minimal information from Mark Lamb, Kyle Davies, and Su regarding the status of remaining funds and spending.
Based on the allegations, proper reporting for creditors was never accomplished, keeping them “in the dead of night” and impeding their ability to take motion. Moreover, allegations have emerged that the founders intentionally manipulated the token’s price.
Employees were allegedly instructed to freeze account withdrawals for users with substantial FLEX balances, stopping them from cashing out. FLEX and OX assets were frozen on-chain to spice up the token price artificially. Influencers were allegedly paid with creditor assets to advertise OX.
Moreover, the founders reportedly used the proceeds from the sale of creditor assets to inflate the identical tokens they’d previously sold over-the-counter (OTC)
Controversial Settlement
Based on CoinFLEX Real’s allegations, requests for information in the corporate were ignored, and any worker communicating with the creditor group was promptly terminated.
It wasn’t until August 2023 that a board was finally formed, but Mark Lamb allegedly refused to attend most board meetings, providing little meaningful information.
Exploiting the absence of a transparent structure, Mark demanded additional funds from creditors to cover legal expenses and private costs related to his support of arbitration.
Mark allegedly met secretly with Roger Ver to settle an $84 million lawsuit over the recommendation of arbitration lawyers who believed CoinFLEX had a robust case. Notably, as the reality began to unravel, it appeared that Mark, Kyle, and Su planned to shut down CoinFLEX to destroy evidence and conceal their misdeeds.
Two weeks ago, evidence of the dimensions of wrongdoing was uncovered when investigators entered CoinFLEX’s Hong Kong office. Staff members were allegedly cut off from systems to obstruct access to crucial evidence. Given these alleged developments, the X account under the pseudonym “CoinFLEX Real” concluded:
These grifters cannot remain unpunished and proceed to contaminate our space. We owe an obligation to guard the crypto community and its repute. We’ve the evidence to pursue justice and ask for the support of the community to make it occur.
Featured image from Shutterstock, chart from TradingView.com