CoinFLEX has become the latest cryptocurrency platform to freeze user withdrawals in response to the current bear market.
Earlier this week, the crypto derivatives exchange CoinFLEX announced discontinuing account withdrawals on its platform, citing counterparty trouble.
CEO Mark Lamb wrote in a company blog post, “Due to extreme market conditions last week & continued uncertainty involving a counterparty, today we are announcing that we are pausing all withdrawals.”
According to the statement, the company would resume withdrawals “as soon as possible” once it is in a “better position.” However, CoinFLEX has not given any specific date for resuming withdrawals.
Moreover, the company is holding on all futures and spot trading of its native cryptocurrency, the FLEX coin. Like Binance’s BNB, CoinFLEX customers use the FLEX coin to reduce trading fees on the exchange.
Notably, CoinFLEX clarified that the troubled counterparty is not Three Arrows Capital (also known as 3AC) “or any lending firm.” That would include Celsius, the crypto lending platform in dire financial condition, 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,” Lamb added.
Crypto Firms Hit By Market Downturn
Amid the collapsing crypto market, Three Arrows Capital’s over-leveraged crypto positions got liquidated, making it one of the biggest institutional casualties in the crypto industry this month. The firm had deeply invested in Terra, which plummeted to zero following the collapse of its associated algorithmic stablecoin, UST.
Firms exposed to Three Arrows Capital were forced to take similar actions as CoinFLEX. In addition, Crypto staking platform Finblox has significantly reduced its platform withdrawal limit this month. Meanwhile, Hong Kong-based Babel Finance has entirely paused its withdrawals in response to related “risk events.”
One of the latest firms to feel the after-effects of 3AC’s insolvency is crypto broker Voyager Digital. After revealing its $661 million exposure to 3AC on Wednesday, the firm’s stock plummeted 60%. The next day, Voyager followed up with a 60% cut to its daily withdrawal limit.