Physical futures crypto exchange CoinFLEX has announced that it will be issuing a Recovery Value USD (rvUSD) token to address recent withdrawal issues. The announcement comes after the exchange had halted withdrawals amidst considerable market volatility and counterparty uncertainty.
$47 Million In Recovery Tokens
The physical futures crypto exchange announced the issuance of $47 million in tokens after halting withdrawals thanks to an outstanding debt owed to the exchange by a high-net-worth individual. The issuance of the tokens is set to begin tomorrow and is slated to continue until the 1st of July, 2022, CoinFLEX announced through its whitepaper.
The company further stated that it would have auto-liquidated positions low on equity under normal circumstances.
“In normal circumstances, we would auto-liquidate a position that runs low on equity at prices that are prior to the zero-equity price.”
CoinFLEX also revealed that the issuance includes a 20% APR (Annual Percentage Rate) accrued and paid out daily in rvUSD.
The High Net-Worth Individual
CoinFLEX pinpointed its withdrawal issues to an outstanding debt owed to them by a high-net-worth individual. The exchange described the individual as a high-integrity individual facing liquidity issues due to the recent crash in the crypto and non-crypto markets. The customer in question also has significant holdings in several unicorn private companies and a considerably large portfolio.
Resumption Of Withdrawals Soon
Currently, CoinFLEX is expecting to resume withdrawals as early as the 30th of June. However, this timeline is subject to the exchange receiving funds depending on the rvUSD issuance. CoinFLEX CEO Mark Lamb played down any bank-run risk, stating that he is unconcerned since customers can withdraw their funds once the exchange completes the new token fundraise. He also stated that the exchange is planning on increasing transparency for futures positions, the notional value of accounts, and margin, revealing that the exchange will look to an external auditing firm for the tasks.
Crypto Twitter Calls Out CoinFLEX
Crypto Twitter was less than impressed by the developments at CoinFLEX. In a thread by FatManTerra on Twitter, CoinFLEX was roundly criticized for authorizing an uncollateralized loan to an individual who is unable to pay it. The thread was highly critical of CoinFLEX turning the debt into a token and selling it to people while offering a 20% APY on it to fund other customers’ withdrawals. The user also criticized the plans for increased transparency, public liquidation points, and pseudo-anonymous balance tracking, calling it an “accidental reinvention of DeFi.”
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