The struggling CoinFlex cryptocurrency platform suspends withdrawals

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The cryptocurrency world is still unable to emerge from a zone of turbulence. Latest incident: the CoinFlex trading platform has suspended all withdrawals of funds. At issue: extreme market conditions and the financial risk associated with a client. And CoinFlex isn’t the only struggling platform.

CoinFlex announced on Thursday that it has suspended all fund withdrawals. It is the third exchange platform of cryptocurrencies to suspend withdrawals in less than two weeks. Ten days ago, Celsius Network made a similar announcement. It was followed last Friday by the Asian actor Babel Finance. The environment is shaken by the sharp drop in most cryptocurrencies in early June. The impact is severe for platforms that offer to lend or borrow cryptocurrencies.

Violent fluctuations

These difficulties are due to the violent fluctuations in the prices of cryptocurrencies which cause the value of the loans and the assets deposited as collateral for these loans to change sharply. As a result, the guarantees provided for a loan may no longer be sufficient and the borrower may have to increase them, which puts him under financial pressure.

The need for some operators to find funds quickly and the climate of mistrust can trigger massive withdrawals, just like what sometimes happens during banking crises.

Unregulated loan market

For his part, CoinFlex Managing Director Mark Lamb said, “ We expect to be able to allow withdrawals again as soon as possible “, estimating this deadline at June 30.

The cryptocurrency lending market is currently unregulated. On Monday, the President of the European Central Bank, Christine Lagarde, called on the European Union to regulate its practices by strengthening European regulations on cryptocurrencies, which are due to take effect in 2024.

► To read also: Cryptocurrencies in ten key questions

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