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Another cryptocurrency platform has frozen user withdrawals in response to the bear market.
Crypto derivatives exchange CoinFLEX today announced that it is discontinuing account withdrawals on its platform, citing trouble with a counterparty. “Due to extreme market conditions last week & continued uncertainty involving a counterparty, today we are announcing that we are pausing all withdrawals,” CEO Mark Lamb wrote in a company blog post today.
According to the statement, withdrawals will be resumed “as soon as possible” once the company is in a “better position.” No specific date was given, however.
In addition, all futures and spot trading for the company’s native cryptocurrency, FLEX coin, will be put on hold. The coin is used by CoinFLEX customers to reduce trading fees on the exchange, not unlike Binance’s BNB.
CoinFLEX clarified, however, that the troubled counterparty in question is not Three Arrows Capital (also known as 3AC) “or any lending firm,” which would include BlockFi and Celsius—two firms known to be in dire straits financially, which the latter potentially causing further contagion in the crypto market.
“We are confident that this situation can be repaired fully with a restoration of all functionality, namely withdrawals,” CoinFLEX’s Lamb said today.
Three Arrows was one of the biggest institutional casualties in the crypto industry this month, as its over leveraged crypto positions got liquidated amid collapsing market prices. The hedge fund was a major player in the digital asset space for years, leading a $9 million funding round for NEAR protocol just two months ago, and several others before that.
The company was also deeply invested in Terra—a former top 10 cryptocurrency which plummeted to zero following the collapse of its associated algorithmic stablecoin, TerraUSD (UST).
Firms with exposure to Three Arrows were forced to take similar action as CoinFLEX did today. Finblox, a staking platform in which 3AC was invested, significantly reduced its platform withdrawals this month. Meanwhile, the Asian crypto lending platform Babel Finance has paused its withdrawals entirely in response to related “risk events.”
One of the latest firms feeling after-effects from 3AC’s insolvency is cryptocurrency broker Voyager Digital. The firm’s stock plummeted 60% after revealing its $661 million exposure to 3AC on Wednesday. The company followed up with a 60% cut to its daily withdrawal limit on Thursday.