A legal battle has been ongoing between Roger Ver, an investor also known as ‘Bitcoin Jesus,’ and Jihan Wu, the co-founder and chairman of Matrixport subsidiary Smart Vega, in Seychelles since last year over frozen cryptocurrency funds.
Ver alleged that Matrixport, through its subsidiary Bit.com, confiscated $8 million from him as a result of financial losses that Wu incurred due to the collapse of CoinFLEX, a separate cryptocurrency exchange.
Ver alleges that Bit.com is refusing to allow him to withdraw the $8 million, and he filed a lawsuit in the Seychelles to address the issue. The lawsuit claims that the insolvency of CoinFLEX is the basis for Wu’s decision to withhold the funds and that it has nothing to do with any sums that Matrixport owes to Ver.
In his affidavit filed in the Seychelles Supreme Court, Ver asserted that Wu’s instruction to withhold his funds was based on a false belief that Ver owed money to a third party (CoinFLEX), who, in turn, owed money to Wu. Ver accused Wu of improperly blending his interests with the defendant.
Wu, a creditor of CoinFLEX, claims he suffered financial losses when CoinFLEX filed for restructuring.
Matrixport Counters Allegations, Citing Ver’s Breach of Contract in Margin Trading Dispute
Matrixport offers a different perspective, alleging that Ver was in breach of contractual obligations related to margin trading irregularities. They also stated that Ver would need to pay a penalty fee for defaulted margin calls.
However, Ver and his attorney contend that Matrixport’s terms of service do not allow such penalties. They assert that no legal justification has been provided for withholding the funds beyond the penalty and that the ongoing litigation should not be a reason for retaining the funds.
Matrixport’s spokesperson, Ross Gan, claimed that Ver had made unreasonable demands beyond fund withdrawal, and lawyers have advised the company to withhold the funds in a third-party custody account pending a court decision.
Matrixport intends to respect the legal process and the ultimate court ruling while reserving its rights to pursue further legal actions in the ongoing dispute with Ver.
Roger Ver has additionally applied for the compulsory winding up (liquidation) of Matrixport based on what he describes as “Jihan’s written admission” that the company was forfeiting funds owed to Ver for Wu’s personal reasons.
The petition is under court review, and Matrixport asserts that it has strong legal grounds to have it dismissed, emphasizing that the company is solvent and well-capitalized.
Roger Ver Disputes Narrative of Involvement in CoinFLEX Collapse, Citing Breaches of Confidentiality
The dispute arises from a narrative that emerged after CoinFLEX’s collapse, suggesting that a large customer, who was later named Ver, failed to meet a margin call, leading to financial losses for CoinFLEX.
However, Ver argues that the narrative of his involvement was a result of breaches of confidentiality regarding arbitration between CoinFLEX and himself.
He initiated the arbitration case in June 2022, seeking $200 million in damages, with CoinFLEX filing restructuring in the Seychelles in August 2022. They also filed a counterclaim accusing Ver of defaulting on an $84 million debt.
The arbitration was held in Hong Kong, where confidentiality was legally mandated. Despite this, Ver claims that CoinFLEX’s founder and CEO, Mark Lamb, intentionally misrepresented the case to the public, making it appear as if CoinFLEX was the plaintiff in the dispute.
They aim to recover money from Ver, whose debt they allege Lamb settled in secret. Ver argued that the arbitration was settled on a “drop-hands” basis and that he is expecting to receive $100 million from third parties as part of the resolution.