On Tuesday, the troubled Cryptocurrency exchange, CoinFlex, filed for restructuring in a Seychelles court to resolve a shortfall due to a counterparty failing to make a margin call.
The company sent out a notice of its restructuring process in emails to customers on Tuesday. It will seek approval from depositors and the court on a proposal to issue depositors with rvUSD tokens, equity, and locked FLEX Coin.
“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,” CoinFLEX CEO Mark Lamb told Bloomberg.
CoinFlex freezes withdrawals
The restructuring filing comes at a time when the company had also suspended trading of its native token, FLEX Coin (FLEX), as well as both perpetual and spot trading after a specific individual’s account, went into negative equity.
In June, CoinFLEX blocked its Crypto withdrawals seeking to recoup $84 million citing “extreme market conditions and continued uncertainty involving a counterparty,” identified by CoinFLEX CEO Mark Lamb as prominent investor Roger Ver, an accusation which Ver tossed.
“Not only do I not have a debt to this counter-party, but this counter-party owes me a substantial sum of money, and I am currently seeking the return of my funds,” Ver said in a tweet on June 28.
Coin flex later launched plans to raise funds by tokenizing its bad debt and selling it to non-U.S. sophisticated investors to raise $47 million owed “large individual customer”, which failed to meet a margin call by issuing new tokens yielding a 20% annual.
Later this month, they partially reopened their user withdrawals to 10% of their account balance, raising cautious optimism that the company was gradually recovering from liquidity constraints that were triggered by a high-profile client default.
Huge Layoffs, Record Withdrawals
CoinFLEX subsequently laid off a “significant number” of its employees in a cost-cutting and restructuring effort disclosing its intent to work with a laser focus on recovery plans that would enable it to regain solvency and that the remaining employees would be mostly focused on product and technology, CoinFLEX said.
CoinFLEX is also pursuing legal action against the defaulter Roger Ver in the Hong Kong International Arbitration Centre (HKIAC) but could take up to a year to get a judgment and enforce it against Ver’s assets.
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