As the crypto market attempts to recoup its massive losses suffered throughout the last two months, some interesting storylines are emerging. One of the most interesting of these is that of CoinFLEX. The crypto staking and trading platform has stirred up chatter after a major investor failed to pay the company $47 million. Now, it is taking creative steps to recoup the funds and get the platform back on track.
CoinFLEX is a crypto trading platform, launched in 2019. Originally, the company existed simply for futures trading. Since launching, though, it has vastly grown out its offerings. These offerings include the platform’s native cryptos, flexUSD and FLEX (FLEX-USD). Perhaps most notable, though, is CoinFLEX’s staking opportunities. The platform allows users to stake the FLEX token for returns of up to 300%, making it easily one of the most lucrative opportunities for earning passive income.
Last week, CoinFLEX became a hot topic after it froze withdrawals from its platform. The controversial move came after “extreme market conditions” the week before. But, the company notes another curious reason for the freeze as well; apparently, the company is experiencing “continued uncertainty involving a counterparty.”
As it turns out, that counterparty is a major investor in the project. CoinFLEX CEO Mark Lamb provided an update late yesterday afternoon in an interview with Bloomberg. The investor involved in the drama saw their account go into the negative as a result of market turbulence. The massive negative equity that resulted left the investor $47 million short when at CoinFLEX’s margin call.
CoinFLEX Releases High-Yield rvUSD Crypto to Repay Debts
In an effort to recoup the missing funds, CoinFLEX looks to be employing creative measures. The company is releasing a high-yield token, the rvUSD crypto, to help raise the funds and pay off its debts.
Short for “Recovery Value USD,” the rvUSD crypto consists of CoinFLEX’s bad debt, tokenized and leveraged at a 20% annual interest rate, paid out daily. After selling $47 million worth of the tokens, CoinFLEX says it will be able to unfreeze withdrawals and resume the platform’s operations as normal.
The client who owes the company will pay off their debts, which the company will convert to USD Coin (USDC-USD), according to the rvUSD whitepaper. Holders of the rvUSD crypto will be able to convert their tokens to USDC on a pro-rata basis; this depends on the amount and frequency of the repayments. If the client does not pay off their debt in 15 months, CoinFLEX will buy out remaining rvUSD with USDC on its balance sheet.
The client involved, as Mark Lamb revealed earlier this afternoon, is Bitcoin.com CEO Roger Ver.
The news is interesting, showing investors how crypto projects can get creative when they need to adjustment their balance sheets. This news come just days after crypto financial service provider Celsius (CEL-USD) had similar problems, forcing it to freeze its own withdrawals.
On the date of publication, Brenden Rearick did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.