An account called “CoinFLEX Real” on X (formerly Twitter) has exposed allegations that the founder of Hong Kong derivatives exchange CoinFLEX and his partner at Three Arrows Capital (3AC) allegedly misappropriated creditors’ assets for personal gain.

CoinFLEX founder Mark Lamb and 3AC’s Zhusu and Kyle Davies are accused of using funds entrusted to them as personal “piggy banks.”

CoinFLEX founder accused of manipulation

CoinFLEX suffered heavy losses of up to $160 million and collapsed in June 2022 due to a negative balance of one of its customers, Roger Ver. Subsequently, a group of creditors developed a restructuring proposal to revive the exchange.

In September 2022, CoinFLEX leadership proposed a reorganization plan that gave creditors majority ownership and board control. The company retained $10 million to fund the lawsuit against Roger Ver and facilitate the restart.

However, in January 2023, Mark Lamb suddenly founded an independent exchange called OPNX, seemingly unrelated to CoinFLEX. Despite this, the exchange's funds supported OPNX's operations.

Mark allegedly misled regulators by holding OPNX as part of CoinFLEX and manipulating FLEX tokens for “personal gain.” The new venture relied heavily on CoinFLEX’s technology, funding, employees, and FLEX tokens.

CoinFLEX’s website even encourages users to migrate to OPNX despite the lack of authorization to develop this new business, which contradicts the terms of the restructuring order awaiting approval by the Seychelles court.

Over the next six months, CoinFLEX stakeholders received minimal information from Mark Lamb, Kyle Davies, and Su regarding the status of remaining funds and expenditures.

According to the allegations, proper reporting by creditors was never completed, keeping them “in the dark” and hampering their ability to take action. In addition, there are allegations that the founders intentionally manipulated the price of the tokens.

Employees were allegedly instructed to freeze account withdrawals for users with large FLEX balances, preventing them from cashing out. FLEX and OX assets were frozen on-chain, artificially inflating token prices. Influencers were allegedly paid to promote OX via creditor assets.

Furthermore, the founders reportedly used the proceeds from the sale of creditors’ assets to inflate the same tokens they had previously sold over-the-counter (OTC)

Controversial solution

According to CoinFLEX Real’s allegations, the company’s requests for information were ignored and any employees who communicated with the creditor group were summarily fired.

It wasn't until August 2023 that the board was finally formed, but Mark Lamb allegedly refused to attend most board meetings and provided little meaningful information.

Taking advantage of the lack of a clear structure, Mark requested additional funds from creditors to cover his legal and personal expenses associated with supporting the arbitration.

Mark allegedly met secretly with Roger Ver to settle an $84 million lawsuit based on the advice of arbitration lawyers, who found CoinFLEX's case to be strong. Notably, as the truth began to emerge, Mark, Kyle, and Su appeared to plan to shut down CoinFLEX to destroy evidence and cover up their crimes.

Two weeks ago, when investigators entered the CoinFLEX Hong Kong office, they found evidence of massive misconduct. Staff were allegedly cut off from the system to prevent access to key evidence. In light of these alleged developments, the X account, using the pseudonym “CoinFLEX Real,” concluded:

These scammers cannot remain unpunished and continue to infect our space. We have a responsibility to protect the crypto community and its reputation. We have the evidence to pursue justice and ask for the support of the community to achieve this goal. #CoinFLEX  #3AC