By
Steve Muchoki
August 7th, 2023
On June 23, CoinFLEX announced that it was freezing trading and withdrawal of its FLEX token on its platform and cited the “extreme market conditions” and “continued uncertainty involving a counterparty.”
Crypto exchange CoinFLEX has announced that it has filed for restructuring in a Seychelles court in a bid to resolve its latest legal battles. The exchange is now seeking approval from the court and depositors on its proposed plan to raise $84 million to clear its debt by issuing depositors with rvUSD tokens, equity, and a locked version of the FLEX coin, the exchange’s native token.
Mark Lamb, CEO of CoinFLEX, revealed that the company had notified its customers of its restructuring process via emails on August 9. “We look forward to welcoming a new group of shareholders to CoinFLEX and are glad to be in a jurisdiction where we can quickly resolve this situation and return maximum value to depositors,” he stated.
On June 23, CoinFLEX announced that it was freezing trading and withdrawal of its FLEX token on its platform and cited the “extreme market conditions” and “continued uncertainty involving a counterparty.”
What followed five days later was the company’s decision to issue the new “Recovery Value USD” (rvUSD)token in an attempt to resume withdrawal on its platform.
Lamb, at the time, stated that the exchange was not going to reveal the identity of the said counterparty but vowed to make leveraged positions more transparent moving forward, starting with contracting an external auditing firm to do so.
CoinFLEX has however reportedly identified Roger Ver, an early bitcoin pioneer and investor, and now promoter of Bitcoin Cash, as the client who defaulted on a $47 million loan.
Although Ver has denied any involvement in any activity, CoinFlex has entered a process of arbitration in Hong Kong with him at the center of it, updating the total amount of its lost funds to $84 million after liquidating customers’ FLEX coin positions.
CoinFLEX, regardless of its seemingly unending saga, has made 10% of user funds available for withdrawals, although the majority of customer deposits are still inaccessible.
The exchange also announced a workforce reduction last week in an effort to reduce costs that “impact a large percentage of the CoinFLEX team across all departments and regions.”
“The intention is to remain right-sized for any entity considering a potential acquisition of or partnership opportunity with CoinFLEX,” the company stated at the time.
The company is also in discussions with its depositors willing to help, about turning some of their funds into equity to support the company. As stated by CoinFLEX, a number of the investors in this group of substantial depositors have shown a desire to support the company’s recovery and growth.
As part of the proposed restructuring, the exchange wants to construct the so-called “Locked Balances Markets,” which would be traded against unlocked balances on the platform. CoinFLEX is also finalizing the instruments required to address what it calls “the imbalance between our available assets.”