Following a trusted client’s failure to meet a margin call last Thursday, CoinFLEX intends to sell high-yield tokens valued at $47 million in order to recoup missing cash and resume withdrawals.
CEO of CoinFLEX: Hard to get business back on track
struggling exchange for cryptocurrencies According to CEO Mark Lamb on Wednesday, CoinFlex is unlikely to be able to let users to withdraw cash once more on Thursday as initially anticipated.
We’ll require extra time. And it’s unlikely that withdrawals would resume tomorrow, Lamb said on June 29 to CNBC.
Thursday saw the suspension of customer withdrawals from the Hong Kong-based cryptocurrency exchange due to “extreme market conditions” and “ongoing counterparty concern.”
The unknown counterparty reportedly entered capital own negatives while failing to pay its $47 million loan, despite not being the fading crypto giant, the faltering crypto hedge firm Three Arrows Capital, or any lending company, the exchange noted.
To be clear, neither 3 Arrows Capital nor any other loan company is the counterparty. We are convinced that a full recovery of all functionality, including withdrawals, will solve this problem once and for all. On the CoinFlex blog, may we read?
It is hardly the first bitcoin industry titan to have to impede withdrawals amid a downturn. In fact, Celsius recently declared that it was halting all transactions on its site. Investors’ reactions were extremely powerful, and this affected the entire cryptocurrency market.
CoinFLEX aims to use a token to address its issues.
The cryptocurrency lender revealed its plans to raise money on Monday. It would tokenize its bad debts, dubbed Recovery Value USD, or rvUSD, and offer them to knowledgeable non-US investors. The notification stated that the exchange planned to issue new tokens with a 20 percent annual return in order to raise the $47 million that was lacking.
- We don’t know what will happen next, Mr. Lamb said. “Our current aim is to bring those funds together, whether he repays or not.”
- He continued by saying that he was sure “that this recovery is going to happen one way or another”.
Uncertainty exists on how the market will react to this kind of new token, which offers a rather original solution to an essentially unique issue. The whitepaper for the token states that rvUSD holders would be able to transfer their tokens to USDC on a pro rata basis for future repayments, and that CoinFLEX customer debt repayments would be converted to USDC.
- “We wanted to make sure the assets all match, and everything matches, in a way that is market-based,” the CEO said on Bloomberg. “We transfer that risk on to investors who understand that risk and are willing accept this risk, and we basically address the problem.”
The only thing left to do is watch how CoinFlex’s massive wager develops. This kind of investment is incredibly dangerous and ought to only be made by experienced investors who are aware of all the variables involved.
