Big Name Investor Leaves CoinFLEX In The Dark: Will Recovery Value USD Save The Innovative Trading Platform?

After a major investor failed to repay debt, CoinFLEX has been left in the dark with negative equity and angry investors. 

CoinFLEX is a crypto trading platform that introduced a new way to trade crypto. Its stablecoin flexUSD allows investors to earn interest on the base level. The company's website states, “flexUSD is the first multi-yield bearing stablecoin and the first stablecoin that pays interest at the base level, meaning that it will generate additional capital simply by holding the coin.”

This method of gaining capital is known as yield mining, and unlike other forms of crypto, it allows investors to earn interest similar to a bond. 

FlexUSD was a great success for the company, and at one time the company said the coin had a market cap of $330 million and annual percentage yield of 10.3%.

CoinFLEX Halts Withdrawals: Everything seemed to be trending up for CoinFLEX until June 23 when it halted withdrawals from the website. The company cited “extreme market conditions” and “uncertainty involving a counterparty” as its rationale for taking such steps.

This letter left investors enraged as they seemed to lose control of their assets.

It is now known that the reason for this halt is in fact that a major investor has left the company with unpaid debt. 

TWhen asked by CNBC to name the investor, CoinFLEX CEO Mark Lamb declined to do so but said they are “a high-integrity person of significant means, experiencing temporary liquidity issues due to a credit (and price) crunch in crypto markets (and non-crypto markets), with substantial shareholdings in several unicorn private companies and a large portfolio,” CNBC News reports. 

Many have asked Lamb why the company can’t just liquidate the investor’s assets. His reply has been that the investor's contract has a no liquidation of equity clause that would prevent the company from taking such action. 

By the unnamed investor taking such action, CoinFLEX has been left with negative equity and is looking for alternatives to correct the problem.

What’s Next For CoinFLEX: CoinFLEX needed to come up with a timely decision on how to resume trading on their platform and has created Recovery Value USD or rvUSD to try and recuperate some of the lost debt. The company has issued $47 million worth of the digital coin with a 20% interest rate to entice investors. 

If all of the $47 million of the coin is bought, the company will begin to recover some of its debt. While they will move forward and begin to sell rvUSD, the main goal still remains that the investor would repay their debt.

For now, the company remains hopeful and will resume withdrawals on the site beginning on June 30th.