Jun 29, 2022 05:05
Coin Futures Lending Exchange (CoinFLEX) issued a new token called Recovery Value USD (rvUSD) on Tuesday.
The token, whose issuance will be halted on July 1, 2022, is targeted at covering the shortfall in the trading platform’s books.
According to CoinFLEX, the issuance price for the token is 1 USD Coin for 1 rvUSD.
As the maximum amount to be issued has been pegged at 47 million rVUSD, this means that the trading platform is trying to raise $47 million from the token issuance.
According to a whitepaper on rvUSD published by CoinFLEX, only non-US resident sophisticated investors are eligible to buy the token.
Additionally, the crypto platform disclosed that rvUSD attracts a 20% annual percentage rate (APR) that is paid daily in rvUSD.
Withdrawal and Negative Equity
CoinFLEX last week halted withdrawals for users of its trading platforms.
In a blog post published on Monday, Mark Lamb, CoinFLEX’s Chief Executive Officer, explained that the platform decided to suspend withdrawals after the account of a 'long-time customer' went into negative equity.
This means that the customer’s account is holding a negative balance, Lamb said.
The Chief Executive noted that no other account on CoinFLEX is in negative equity.
Furthermore, Lamb pointed out that CoinFLEX would have liquidated the investor’s account but was unable to as the customer had a non-liquidation recourse account.
“This condition required the individual to pledge stringent personal guarantees around account equity and margin calls in exchange for not being liquidated,” Lamb explained in the blog post.
In the whitepaper, CoinFLEX noted that the rvUSD token is related to the outstanding debt owed by the high net worth individual.
In the blog post, Lamb noted that the trading platform was hoping it could re-enable withdrawals on Thursday “subject to receiving funds pursuant to the rvUSD issuance.”
“If the rvUSD token issuance is fully subscribed, CoinFLEX will re-enable withdrawals and restore the platform to full functionality in an orderly manner.”
Meanwhile, the cryptocurrency loan company, Celsius similarly suspended withdrawals on its lending platform some weeks ago.
Celsius said the decision was taken due to extreme volatility in the cryptocurrency market.
“We are taking this necessary action for the benefit of our entire community in order to stabilize liquidity and operations while we take steps to preserve and protect assets,” Celsius wrote in a blog post.
This article was written by Solomon Oladipupo at www.financemagnates.com.
World Crypto Global
