Cryptocurrency exchange CoinFlex announced that it would issue up to $47 million of recovery tokens as the firm looks to resume withdrawals after halting them in the wake of a large account running into difficulties.
The exchange halted customer withdrawals in mid-June, revealing in a whitepaperyesterday that the issue stemmed from a high profile customer running a negative balance in their CoinFlex account.
The customer, described as a “high integrity person of significant means,” had equity and margin call obligations that prevented their negative balance account from being liquidated, as the exchange would in a normal scenario.
Looking to resume withdrawals, the exchange will issue $47 million of Recovery Value USD tokens through July 1 to high-income or high- net worth individuals to cover the shortfalls of the account in question. Fundraising from the token is expected to allow withdrawals to resume on June 30, according to a statement by CoinFlex Chief Executive Mark Lamb.
Buyers of rvUSD will have the opportunity to convert their tokens to USDC, or a combination of USDC and FLEX Coins as the high-profile customer recovers their account. CoinFlex emphasized the integrity of the customer, noting that the individual had large holdings in “unicorn private companies,” and had never missed a margin call before the recent blow to the crypto market.
The recovery tokens will also come with a 20% APR, offering a sizable return to potential investors.
“We have been speaking to potential large buyers and believe there is significant interest,” Lamb added.
CoinFlex is one of many exchanges to struggle amidst the massive sell-off from crypto investors. Earlier this month, Babel Finance announced it would suspend withdrawals, according to CoinDesk.
Voyager Digital, meanwhile, has also struggled amid the rout. The crypto firm capped customer withdrawals at $10,000 last Thursday as it dealt with a default on a loan made to crypto hedge fund Three Arrows Capital.
- ^ in a whitepaper (coinflex.com)
- ^ net worth (www.businessinsider.com)
- ^ allow withdrawals to resume on June 30 (coinflex.com)
- ^ suspend withdrawals (www.coindesk.com)
- ^ capped customer withdrawals at $10,000 (markets.businessinsider.com)
- ^ a loan made to crypto hedge fund Three Arrows Capital (markets.businessinsider.com)