Many of you may have seen the Bloomberg article about our filing for restructuring or have received the notice by email.
This article elaborates on CoinFLEX’s next steps, specifically what each step depends on and our progress on each. Of course, these next steps could change.
We will be publishing the following data that’s relevant to the Composite (flexUSD, rvUSD, shares and the last USDC distribution):
- CoinFLEX balance sheet
- Scheme of Arrangements for CoinFLEX (Draft or Final documents to be published)
- Updated Memorandum and Articles of Association of Liquidity Technologies Ltd (“CoinFLEX”)
- rvUSD Trust Documents
- White Paper/Term Sheet of the rvUSD Token
- Terms and Conditions of the rvUSD Token
- RV SPL (Recovery Value Special Purpose Limited) is a Purpose Trust* that will be created as part of CoinFLEX’s scheme of arrangements with depositors, and that Trust will be issuing rvUSD. The trust documents will be published.
- CoinFLEX will cover the legal costs (up to a certain amount) for RV SPL’s pursuit of legal actions against the Individual including all necessary injunctions/enforcement actions. The Board of CoinFLEX may choose to increase the amount, or the Trust can decide to finance the litigation (a vast market exists for this financing).
- Documentation relating to assigning the benefits of the recovery action from CoinFLEX to RV SPL.
- Voting Trust Agreement
- A trust will hold shares on behalf of depositors to keep the cap table of CoinFLEX relatively straightforward.
- Depositors above a certain threshold of shares will be able to convert their interests directly into shares on the cap table. Equity holders via the Trust will hold all the same economic privileges as holding shares directly in CoinFLEX.
What is this step dependent on? This is dependent on legal processes in Seychelles which have been well underway and are being expedited. We expect this “Publish Everything” step to be the next one in our process.
Listing Locked Asset Markets
Listing locked asset markets depends on the “Publishing Everything” step. We do not want locked asset users to be trading on incomplete information when selling locked assets into unlocked assets or buyers of locked assets buying with an incomplete picture of events.
We will let users trade LUSDC, LBTC, LBCH, or any other locked asset into an unlocked asset of the same type (for example LBCH/BCH, LUSDC:USDC, LETH/ETH) on CoinFLEX order books.
Note: This is not dependent on tech effort, which has already been completed. This is purely dependent on the “Publish Everything” step. Once that’s done, locked asset markets will go live shortly after.
There is still some administrative cleanup of flexUSD required.
- Unlocked flexUSD on CoinFLEX.com, which is 1:1 redeemable with USDC
- Locked flexUSD on CoinFLEX.com, which is locked / unusable
- flexUSD on the blockchain can be traded/sold on DEXes, but if deposited, will be split into 90% locked flexUSD and 10% unlocked flexUSD.
The goal is:
- Have a unified flexUSD that can be deposited/withdrawn freely without lockups or constraints
- Do not give preference or economic advantages to users that have done one thing versus another, i.e., people who have redeemed and haven’t; people who keep flexUSD onchain vs. on CoinFLEX.
Simple way to achieve this goal:
- All unlocked flexUSD on CoinFLEX will be converted to USDC (withdrawable) on CoinFLEX
- All locked flexUSD on CoinFLEX will be converted to LUSDC (soon to be tradable) on CoinFLEX
- Users who want to mint flexUSD (click here for why a user might want to mint flexUSD) will be able to do so using a combination of 10% USDC and 90% LUSDC. For example: 10 USDC and 90 LUSDC will be able to mint 100 flexUSD. This minting will only be possible during CoinFLEX’s restructuring process, after which LUSDC will be converted into the Composite.
The result is that flexUSD will be freely depositable, withdrawable, and tradable on CoinFLEX order books. This should make it easier for users to do OTC flexUSD trades, DEX trades, buy/sell flexUSD on the platform, or anything else they wish to do with flexUSD during this restructuring process. Redemptions will be on-pause until restructuring is completed, after which redemptions will be made available into the Composite.
Note: This cleanup does not depend on any Seychelles government processes or votes undertaken by creditors, because it does not change our assets/liabilities. We will do this as soon as possible from a tech perspective, which we expect to be next week (for completing all steps).
SmartBCH Liability Transfer
We are in advanced discussions (finalizing matters) with a group that wants to restore the bridge and take over the SmartBCH obligations. We aim to finalize and sign an agreement with this group as soon as possible.
This may conclude before the depositor vote, before the completion of restructuring, or post the completion of restructuring.
Distributing Vote Tokens
We will be distributing vote tokens based on user balances on CoinFLEX. This distribution will happen soon, and we will give at least two days’ notice before the issuance of vote tokens.
A few important things to note:
Vote Token Ticker: CFV
Vote Token Name: CoinFLEX Vote Token
Token ID: 0x14c92fA89A2322fD2fcC928620ac67503c05627B
Blockchain: Ethereum (Snapshot.org works best with Ethereum)
- Only balances within CoinFLEX will be issued vote tokens (aka flexUSD outside of CoinFLEX will not be counted).
- CoinFLEX.US and CoinFLEX.com users will be counted.
- In the case of CoinFLEX.US users, only their flexUSD balances will count towards the vote since all other balances are withdrawable and unaffected.
- In the case of CoinFLEX.com, all locked balances will be counted. FLEX Coin and unlocked (withdrawable) balances will not count towards issuing vote tokens.
- $1 worth of balance will be credited with 1 CFV. The dollar value of assets will be snapshotted at the time of issuance or at a pre-determined time before the snapshot of balances.
- The snapshot related to the issuance of vote tokens will differ from the snapshot associated with issuing the Composite.
- Voting will take place using Snapshot.org’s technology, which is open source and used by many DeFi projects for governance.
- Post restructuring, we will issue a new vote token to shareholders, which will be based on who owns shares and will not be related to this CFV token issuance.
Vote Tokens will not be transferable on the blockchain between users. They cannot be sold. They can only be transferred in/out of one’s CoinFLEX account or used to vote on Snapshot and our governance system.
Tech dependencies: There are no tech dependencies for issuing these tokens. CoinFLEX DeFi team has completed this work, and we are preparing to go live with this.
Seychelles Court Processes
After the vote concludes, some Seychelles court processes will be involved in ratifying it, at which point restructuring will conclude. We will provide more information on these processes later, but for now, our Seychelles lawyers are confident of implementing the arrangement. We look forward to the completion of restructuring.
The above statements are projections based on CoinFLEX’s understanding of the agreement likely to be approved by 75% of depositors as part of CoinFLEX’s restructuring process in Seychelles. Any change in the outcome of that process could change the above projections and guidance, so these statements should not be treated as final and definitive.
*All Trusts and entities created as part of this process will be Seychelles entities.