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Crypto investment platform CoinFLEX aims to rectify its liquidity shortage and restart user withdrawals by selling off bad debt through a new $47 million token offering.<\/p>\n
The new token is known as Recovery Value USD (rvUSD) and will be worth $1 each. It is designed to help CoinFLEX recover $47 million in losses incurred by an account that was allowed to reach negative equity without being liquidated. It will be issued from June 28 through July 1, and the firm stated that it hopes to resume withdrawals by June 30.<\/p>\n
While the identity of the individual whose account went negative is still unknown, CoinFLEX CEO Mark Lamb insisted in a June 27 announcement that the individual \u201cis a high-integrity person of significant means.\u201d What is known is that in a June 23 blog post, Lamb blamed the individual\u2019s bad debt for halting withdrawals.<\/p>\n
\nHi everyone, we\u2019re sharing our latest update on plans for re-enabling withdrawals on the platform https:\/\/t.co\/34brwoDYuL<\/p>\n
\u2014 CoinFLEX (@CoinFLEXdotcom) June 27, 2022<\/a><\/p><\/blockquote>\n
Under normal circumstances, the crypto lender liquidates accounts before they reach zero equity. However, Lamb explained that in this instance, CoinFLEX opened a one-of-a-kind \u201cnon-liquidation recourse account\u201d wherein it agreed to not liquidate the account, and the borrower agreed to keep it filled with plenty of equity. <\/p>\n
Things did not go according to plan as the account went negative, allegedly causing a liquidity crunch at the firm. Lamb added that this account was the only one on CoinFLEX with negative equity.<\/p>\n
rvUSD will be issued to non-US resident \u201cSophisticated Investors\u201d at a minimum subscription of $100,000 per investor. Investments come with a 20% annual percentage rate paid in rvUSD. <\/p>\n
A Sophisticated Investor is one who has an annual income of at least $200,000, a total net worth of at least $1 million, and has performed the Know Your Customer (KYC) procedure on CoinFLEX.<\/p>\n
In order to prevent this from happening again, Lamb stated that he would not issue that type of account anymore. His firm will also expand its transparency by making public the notional USD value of every account\u2019s futures positions through an external auditing firm. <\/p>\n
\nCoinFLEX CEO explains what happened and why he’s “highly confident” withdrawals will re-open June 30 https:\/\/t.co\/P9GhSo6BM4 pic.twitter.com\/5ERlmRNdYi<\/a><\/p>\n