In an official statement published this Thursday (23), cryptocurrency exchange CoinFlex announced the interruption of withdrawals to its customers. As justification, he pointed to the “extreme market conditions”, which aroused mistrust among some users.
On Twitter, some accuse the exchange of being a financial pyramid. After all, a brokerage service would have a duty to keep the balance of its users safe. Others responded ironically, as seen below.
“Do you also interrupt deposits?”
In the note, CoinFlex also points out that it has no affiliation with lenders that may be insolvent, citing Three Arrows Capital. Anyway, the explanation is rather elusive.
Exchange owns two cryptocurrencies of its own, both melted
In addition to pausing withdrawals, freezing its clients’ funds, the CoinFlex exchange’s situation looks even worse. After all, the exchange has two cryptocurrencies of its own, Flex Coin (FLEX) and stablecoin flexUSD (FLEXUSD).
Despite FLEX trading also being paused, the exchange was unable to hold its value. Listed at 25 reais last week, the CoinFlex cryptocurrency melted to R$7.50 after withdrawals stopped.
In addition, the flexUSD (FLEXUSD) stablecoin also suffered a sharp drop on the news, causing it to lose support to the dollar, as did TerraUSD (UST). The stablecoin is currently trading at $0.83.
Because of this, some users remembered that a month ago the company’s CEO was promoting its stablecoin and insulting other coins. Others point out that this is why the market needs regulation.
Exchange is not a wallet
So this is another reminder that exchanges should not be used as wallets. After all, you have no control over the money and you may not even know if a particular exchange actually has your money on hand. It is recommended to use a cold wallet, which can be purchased from KripoBr.
Even before the fall, in April, a miner even warned that cryptocurrency exchanges were insolvent and asked for loans to honor withdrawals from customers. However, many did not take his advice seriously.
According to FlexCoin, the exchange will resume withdrawals as soon as possible and the announcement will be updated next Monday (27). However, his reputation already seems to have collapsed, as has the price of his two cryptocurrencies.
Source: Live Coins
John Cameron is a journalist at The Nation View specializing in world news and current events, particularly in international politics and diplomacy. With expertise in international relations, he covers a range of topics including conflicts, politics and economic trends.
