Who is CoinFLEX’s Mystery Debtor?

CoinFLEX, a crypto lender, plans to sell about $47 million worth of tokens in hopes of reinvigorating withdrawals, CEO Mark Lamb wrote in a Tuesday blog post.

  • The token, rvUSD, will offer annual returns of 20%.

Why it’s the BFD: CoinFLEX halted withdrawals about a week ago after a single major longtime customer failed to repay their debt, highlighting weak risk controls weighing on multiple crypto lenders.

Details: CoinFLEX does not disclose the identity of the client, only that this “individual is a person of high integrity of significant means, experiencing temporary liquidity issues due to a credit (and price) crisis in the crypto markets ( and non-crypto markets), with holdings in several unicorn private companies and a large portfolio.”

  • Usually, CoinFLEX says it would automatically liquidate the client’s position, but both parties had an agreement that prevented that from happening.
  • The firm previously said the client was not embattled hedge fund Three Arrows Capital.

Background: Polychain Capital, Electric Capital and Digital Currency Group support CoinFLEX.

Why is (customer identity) important?: CoinFLEX plans to pay rvUSD holders primarily through this debt repaying client. And without a clear idea of ​​who the client is, rvUSD holders will have to trust CoinFLEX’s trust in said client. And, again, there is no guarantee that CoinFLEX will be fully refunded.

  • Still, CoinFLEX says it has “spoken to large potential buyers” and believes “there is significant interest in the terms presented.”