CoinFLEX Launches $47 Million Token Recovery Plan to Resume Withdrawals
Last week, cryptocurrency derivatives exchange CoinFLEX joined a growing list of digital asset platforms to halt withdrawals due to market uncertainty and issues with its counterparty. The company has now unveiled a recovery plan that involves the creation of a new token.
CoinFLEX to Raise $47 Million
Announcing the solution on Monday, CoinFLEX said it plans to raise $47 million through the issuance of a new token dubbed Recovery Value USD (rvUSD). The exchange further noted that it has been in talks with “potentially large buyers” who have “significant interest” in the terms offered.
In the rvUSD whitepaper, the firm noted that the issuance price for the new token would be 1 USDC per rvUSD, and it intends to release a total of 47 million rvUSD, amounting to 47 million USDC ($47 million).
The whitepaper further revealed that the issuance is only available to sophisticated investors outside the United States, and the minimum subscription amount is 100,000 USDC. It will start today, June 28, and run until Friday, July 1.
The firm said investors would receive a 20% annual rate (APR) on the new token accrued and paid daily via rvUSD.
CoinFLEX Withdrawal Issues
CryptoPotato reported that CoinFLEX’s withdrawal problems stemmed from an issue involving a counterparty.
The company noted that the counterparty is a high-net individual who owes the exchange after his account turned negative due to the recent market crash.
The firm said it usually auto-liquidates accounts running low on equity at prices before the zero-equity price. However, the individual involved had “a nonliquidation recourse account,” so their position could not be terminated.
“In this case, the Individual had a nonliquidation recourse account, a condition that means they will not be liquidated in exchange for personally guaranteeing their account equity,” the exchange said.
CoinFLEX further noted that the client is a “high integrity person” with a large portfolio and significant stakes in several private unicorn companies.
The firm plans to re-enable withdrawals on June 30, depending on whether it receives funds from the token issuance. The firm hopes to restore its platform to full functionality if it raises the entire sum.Source