While CoinFLEX's creditors and OPNX's management await their day in a Hong Kong court, another legal scuffle is brewing between Roger Ver – whom some call 'Bitcoin Jesus' – and Jihan Wu, the co-founder and chairman of Matrixport. The feud is over $8 million Ver says Wu took from him as punishment over his supposed role in the demise of unrelated crypto exchange CoinFLEX.
“CoinFLEX’s insolvency lies at the heart of the reason Wu ordered [Matrixport] to convert my Funds," the court docket reads. "CoinFLEX’s insolvency has nothing to do with the sums [Matrixport] owes to me.”
Ver was also named in the writ against OPNX, which was filed by CoinFLEX’s creditors in Hong Kong.
Ver says CoinFLEX’s demise was not his fault
For his part, Ver says in the Seychelles suit that the whole narrative emerged only because of “flagrant breaches of confidentiality” involving arbitration between CoinFLEX and himself.
“I started the arbitration against CoinFLEX in June 2022, seeking $200,000,000 in damages. I was the plaintiff, not CoinFLEX. CoinFLEX was the defendant and only later filed a counterclaim for $84,000,000,” Ver told CoinDesk in an email.
Ver said he began an arbitration case against CoinFLEX in June 2022, seeking $200 million in damages he sustained from trading on the platform, CoinDesk reported. Ver alleged he had “evidence that certain third parties were provided with knowledge of my sizable positions on CoinFLEX and traded against them to my detriment.”
“The arbitration was in Hong Kong, where the law is clear that the arbitration is required to be kept confidential,” he continued in an email to CoinDesk.
Despite this, he says that Lamb, CoinFLEX’s founder and CEO, broke confidentiality to “intentionally misrepresent to the entire world that CoinFlex was the plaintiff and give their side of the case.”
“CoinFLEX went insolvent due to a combination of the May 2022 market turmoil and its co-founders’ poor risk management,” Ver wrote in a Seychelles court filing.
Matrixport doesn’t deny withholding crypto
In exhibits attached to court filings, and statements Matrixport made to CoinDesk, neither Wu nor the company denies that crypto is being withheld from Ver. Still, the dispute is over the rationale behind it.
“My position is very simple. I am a creditor of CoinFlex, and CoinFlex is a creditor of you. You just send your USDC back to CoinFlex to repay the debt there, and CoinFlex releases the $5 million USDC to me,” Wu wrote.
In earlier correspondence with CoinFLEX’s Mark Lamb, Wu discussed selling the debt to him.
“Roger chatted with me and insisting that CoinFLEX owes him money because you refused to liquidate,” Wu wrote. “In no way I will release the USDC to Roger.”
Ver also alleges that Matrixport is struggling with liquidity issues, quoting a statement that Wu made to him, in which he said he “needs to gather every possible liquidity have to Matrixport.”
“If I had an easier situation, I would not have done this,” Wu is quoted as saying.
“Wu’s statement further indicated to me that Respondent was insolvent or on the brink thereof, and therefore was unable to permit me to withdraw the Funds,” Ver wrote in the Seychelles filing.
Matrixport says the funds are being held because of an investigation into Ver’s “margin trading irregularities.”
“Subject to a penalty fee for margin call defaults, Mr. Ver was free to withdraw his funds but instead disputed the penalties payable,” Matrixport spokesperson Ross Gan told CoinDesk. “Ver continues to make unreasonable demands to bit.com other than the withdrawal of his funds.”
Ver has filed in Seychelles to wind up (liquidate) Matrixport “based on Jihan’s written admission that Matrixport was forfeiting funds it owed me for his own personal reasons.”
Correspondence between Ver and Matrixport shows that the exchange wants to withhold $1.29 million as a penalty for defaulted margin calls and legal fees.
Disputes over Terms of Service
In emails between Matrixport executive Mo Zhou and Ver’s attorney, Daniel Kelman, Matrixport wrote that the firm is committing significant legal resources to fight Ver’s case in Seychelles and “our counsel has advised us that bit.com has the right to claim set off against your balance given these costs/damages.”
Kelman countered that bit.com’s terms of service, which Ver agreed to before opening an account, do not allow such penalties.
“There is no set-off permitted by your terms," Kelman wrote. “[Matrixport has] put forth no legal justification for the continued retention of the approximately $6.54 million left after deducting your fake penalty — not even a phony one invented after the fact to give yourself cover from allegations of criminal theft and conversion."
“Given the ongoing litigation, our counsel has advised the funds be withheld until a court decision provides clarity on the proper course of action,” Matrixport’s Gan wrote to CoinDesk.
In an April 2023 email between bit.com and Kelman, a company representative said that it was willing to put the disputed $8 million into a third-party escrow account pending the resolution of both side’s contractual differences.
UPDATE (Nov. 6, 10:21 UTC): Adds clarity to when the lawsuit was filed in the second paragraph.
CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk offers all employees above a certain salary threshold, including journalists, stock options in the Bullish group as part of their compensation.