By On August 26, 2019, Coinflex, laid bare their intention to ramp up business from Asian retail investors. Coinflex is the first global physical delivery for bitcoin futures contracts. The exchange targets investors who aren’t ready to fall victim to the manipulation of prices that is rampant in cash settlement contracts.
Chief Executive Officer of the Hong Kong-based Company, Mark Lamb, said that contracts that physically deliver bitcoin and other tokens as the settlement would be beneficial to traders. This is to ensure that prices are not manipulated and that they are closely tracked by spot bitcoin price. This move will ensure that cash settlement contracts, whose rates are often calculated based on a formula by spot bitcoin prices of other exchanges, can easily be driven.
Lamb said, “Professional and retail traders alike are affected by price manipulation in the cash-settled futures market. For physically delivered contracts, anyone long at expiry receives the underlying bitcoin. There are no formulas involved.”
City’s Securities and Futures Commission Refused to Grant Licenses to Exchanges
When asked if Coinflex will operate in offering services to Hong Kong-based customers, Lamb offered no comment. The City’s Securities and Futures Commission provided a regulatory framework on cryptocurrency exchanges in November 2018. The Commission voiced their opinion concerning their improbability in granting licenses to exchanges that had their features and derivative contracts traded.
Price Manipulation Put on the Spot
There has been an increase in price manipulation over the past months, according to Lamb. The growth is in relation to traders who moved the underlying spot prices that go into the formula and are in their advocacy. The traders manipulated the thinner trading volume of the cryptocurrency spot market compared to that of features. The trading volume of bitcoin is at 1.5 times that of spot presently.
Last week, Coinflex closed a U.S. $10 million financing round from several blockchain investors, inclusive of NGC Ventures, Polychain Capital, Divergence Digital Currency, and bitcoin cash advocate Roger Ver.
Lamb was not especially open on its goal to overtake Hong Kong-based BitMEX, the second-largest global cryptocurrency exchange with a trading volume of over U.S. $ 2.86 billion. BitMEX recently banned all their Hong Kong users amid growing scrutiny on cryptocurrency exchange operators the world over.
Bitstamp Makes Allegations of Price Manipulation
Suspicions of price manipulation became rife in May, after Bitstamp made reports on a large sell order on bitcoin. The order topped their price by 18 percent in under 11 minutes, according to online outlet media, The Block. This order essentially led to the liquidation of long positions worth close to U.S. $ 250 million on BitMEX, whose contracts reference Bitstamp pricing.
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