CoinFLEX to Launch a $47M Recovery Token to Solve Withdrawal Issues

The exchange said last week it was halting withdrawals amid market declines and counterparty uncertainty.

AccessTimeIconJun 27, 2022 at 11:27 p.m. UTC
Updated Jun 28, 2022 at 5:03 p.m. UTC

Michael Bellusci is CoinDesk's crypto reporter focused on public companies and digital asset firms.

Physical futures crypto exchange CoinFLEX will launch a Recovery Value USD (rvUSD) Token after recently halting withdrawals stemming from an outstanding debt that a high-net-worth customer owes the exchange.

CoinFLEX's issuance of $47 million in tokens comes after a certain individual’s account went into negative equity during recent market volatility. The issuance will begin tomorrow and likely run until July 1, CoinFLEX wrote in a white paper Monday.

"In normal circumstances, we would auto-liquidate a position that runs low on equity at prices that are prior to the zero-equity price," the company wrote.

CoinFLEX described the customer as "high integrity" individual with liquidity issues tied to the recent crash in crypto and noncrypto markets who has "significant shareholdings in several unicorn private companies and a large portfolio."

CoinFLEX said the issuance includes a 20% annual percentage rate (APR) accrued and paid daily in rvUSD.

"We have been speaking to potential large buyers and believe there is significant interest in the terms presented," CoinFLEX CEO Mark Lamb said in a blog post.

CoinFLEX expects to resume withdrawals June 30, but is still subject to receiving funds pursuant to the rvUSD issuance.

When asked of a potential bank run on Bloomberg TV Monday evening, CEO Mark Lamb said he’s unconcerned this scenario would occur as customers can withdraw their funds once the new token fundraise is complete. Lamb also said CoinFLEX plans to boost transparency for future positions, notional value of accounts, margin, and will use an external auditing firm to do so.

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Michael Bellusci is CoinDesk's crypto reporter focused on public companies and digital asset firms.

CoinDesk - Unknown

Michael Bellusci is CoinDesk's crypto reporter focused on public companies and digital asset firms.