Key Takeaways:
- CoinFLEX plans a $47 million token sale to make up for a debt from a "trusted" client.
- The rvUSD launch will save the day only if it meets demand from investors.
- Meanwhile, the high-net-worth individual might be Roger Ver.
YEREVAN (CoinChapter.com) – CoinFLEX, a centralized yield service, plans a $47 million token launch. The new Recovery Value USD (rvUSD) token will raise funds in efforts to cover up an outstanding loan from a customer. As the said customer is over $47 million in debt with no more than a ‘pinky swear’ to pay it back, the move raised many eyebrows, while CoinFlex hoped to resume recently halted withdrawals.
Moreover, rvUSD will offer a whopping 20% annual return, which could potentially drive CoinFLEX into a Terra-like fiasco.
What happened to CoinFLEX?
CoinFLEX controversy began when a particular “trusted” customer failed to honor their $47 million uncollateralized loan debt and went into negative equity.
The exchange noted that in “normal circumstances” it would auto-liquidate a position that runs low on equity. However, the “high integrity individual” did not meet the same treatment from CoinFLEX.
Instead, the platform halted all withdrawals on June 23 as a “protective measure” against meeting the fate of Celsius and Three Arrows Capital (3AC). In short, Celsius ran into liquidity issues, brought on by the market decline, and halted withdrawals on June 13. 3AC, on the other hand, faced insolvency after failing to meet its margin call.
Also read: What happened with Three Arrow Capital (3AC), according to crypto fund’s market maker.
Fast forward to June 28, CoinFLEX came up with a plan to retrieve the lost funds by launching the mentioned rvUSD token.
Will the rvUSD token solve the problem?
CoinFLEX chief executive Mark Lamb wrote an extensive blog post explaining the decision to launch rvUSD.
As a solution toward re-enabling withdrawals, CoinFLEX is planning to monetize this personal guarantee by creating a corresponding liability in the form of [rvUSD token]. We have been speaking to potential large buyers and believe there is significant interest in the terms presented.
said the executive.
Also read: Celsius drops 25% amid Goldman Sachs plan to acquire network assets.
The platform targets to reopen withdrawals on June 30th. However, the plan could fail if rvUSD demand doesn’t meet estimates. “If the rvUSD token issuance is fully subscribed, CoinFLEX will re-enable withdrawals and restore the platform to full functionality in an orderly manner”, said Lamb.
Who owes CoinFLEX $47 million?
The executive did not disclose the client in debt. However, rumors circulated on Twitter shortly after. For example, a fellow researcher at Terra Research Forum alleged the client was in fact Bitcoin.com CEO Roger Ver. According to a “verified source” Ver is a CoinFLEX shareholder and personally guaranteed he would pay them back.
Ver himself did not comment on the matter. However, CoinFLEX CEO assured his investors that the “high net-worth individual” behind the debt will “get us these funds at some point in the future.” Furthermore, Lamb added that he’s not worried about users ‘running the bank’ as soon as withdrawals reopen.
Also read: Stock markets have more room to crash – researchers say.
