- CoinFLEX to issue depositors rvUSD tokens, equity, and locked FLEX Coin
- Depositors get to approve the new structure and path of CoinFLEX
- Further distribution of existing balances to be made available
- Locked balances markets will be created and tradable next week
Why is this needed?
We need to take this action to address the mismatch between our available assets and liabilities caused by the individual who breached his contract with us. It may take some time before we can recover funds owed to us in the litigation actions we are taking against this individual.
The interim plan is that every depositor of CoinFLEX will be pro-rata allocated one of each of the following instruments:
- rvUSD – representing the recovery from the defaulting individual
- Equity – shares in CoinFLEX
- FLEX Coin – a small amount of locked FLEX Coin
Along with finalizing the new instruments, we will also be looking to make a further distribution of existing users balances as part of the above process.
Locked Balances Markets
Additionally, we intend to create markets for locked balances to be traded against unlocked balances, such that users who want more immediate liquidity on their frozen funds can exit/sell to participants that are interested in the recovery plan around rvUSD, FLEX and equity.
We believe this will be an important step in the price discovery process and will be launching these markets next week.
What happens next?
We will continue to work closely with the CoinFLEX community to implement this plan, which we believe is a good solution to making the exchange more community-led while also creating new opportunities for CoinFLEX to:
- Become a profitable business again by significantly cutting costs and working together with the CoinFLEX community to grow customer and exchange volumes
- Be an attractive platform for new investors and joint venture partners who want to work with us and are fans of our product set, specifically physical delivery and repo.
Who decides on the plan and who gets to have a say?
The plan we present to you has to be voted on by depositors, so everyone has an opportunity to have a say if the plan gets approved.
Details of the plan are not yet set in stone. Many of these ideas stem not just from the depositor creditor group and CoinFLEX management but also from the community Telegram channel. Please keep the feedback and suggestions coming, even though we are not necessarily able to respond to each of them directly.
We will also likely be adding depositors to the CoinFLEX Board of Directors to reflect all the different interests. There will be up to three appointments to the Board covering:
- flexUSD holders;
- Crypto depositors; and
- smartBCH holders.
What does the future look like?
We think that the product set we have built at CoinFLEX has significant value in the future, not just in crypto markets but also in other markets where physical delivery is important and allows the tokenization of yield. This could be in the equities markets, where we have the opportunity to disrupt the $2.5 trillion stock lending business that less than ten large banks control today.
Within crypto, we have the opportunity to build a profitable community-based exchange that can become a trusted and much more transparent venue. We can do that by:
- Decentralizing custody such that CoinFLEX is not in control of funds
- Lowering leverage limits so that anyone with large positions would be more sufficiently capitalized on the platform
- Working with an auditing firm to show the positions and collateral backing ALL positions on CoinFLEX. This will make us very similar to DeFi where you always know the position, collateral, and liquidation prices for all position holders
- Take any other ideas from the new shareholders and the community and implement them if they’re widely supported
If we can build this profitable exchange, we will be able to repay depositors via:
- Dividends distributed to them via their equity rights
- Secondary share transactions
- A future acquisition or a liquidity event
- An increase in the value of FLEX Coin
- Redemptions of rvUSD following completion of our litigation actions against the defaulting individual
- Combinations of the above as the timings may all be very different
This won’t be an easy or quick journey and will need the support of everyone, both at CoinFLEX and all of our current and future customers.
Please note that this plan is subject to being finalized and that we are communicating as things progress in order to proactively keep our community and user base as up to date as is possible. We are working towards the legal side of implementing a finalized plan as soon as possible so as to return maximum value to depositors as quickly as we can. Thank you all for your continued support.
We are looking to host a video AMA next week so that we can answer any questions that you have about our plans for the future of CoinFLEX. We may also go on Youtube/podcast appearances next week and discuss these plans more widely.
Sudhu Arumugam and Mark Lamb
Published on: July 22, 2022