CoinFLEX turnaround plan akin to a scam, observers say

The crypto derivatives and yield platform CoinFLEX aims to transform the debt of one of its clients (presented as “very honest”) into a token called Recovery Value USD (rvUSD) in order to finance the withdrawals of other clients. This strategy is not unanimous.

Source: Adobe/Web Buttons Inc.

The exchange will issue 47 million rvUSD at a price of $1 per token, raising $47 million.

Prospective buyers will be offered an annual percentage rate (APR) of 20% in addition to other benefits, including 2.5 million FLEX tokens (2.3 million USD) distributed proportionally to all holders.

However, a number of industry observers were quick to point out that this scheme bears obvious similarities to Ponzi schemes.

“Can someone remind me what this mechanism is called where you need new investors in order to pay old investors?” said Joey Politanoeconomist and financial management analyst at US Bureau of Labor Statistics (U.S. Bureau of Labor Statistics).

“Lending money and can’t get the debt back? No problem, DeFi has the solution! Issue a random shitcoin and let market participants fight each other for the privilege of holding debt, but without recovery mechanism”, a declared another Twitter user.

Last week, CoinFLEX has announcement that it was suspending withdrawals due to extreme market conditions and uncertainty surrounding a certain counterparty whose account turned negative during the recent period of market volatility.

In the rvUSD Issuance White Paper, CoinFLEX has writing that under normal circumstances they would automatically liquidate a position that “runs out of equity”.

However, the company said the individual had always responded to all margin calls prior to this incident and also had a “non-liquidation recourse account”, meaning he would not be liquidated in exchange of the personal guarantee of the own funds of his account.

“The individual is a person of high integrity of significant means, who is experiencing temporary liquidity issues due to a credit (and price) crunch in the crypto markets (and non-crypto markets), who owns significant holdings in multiple unicorn-like private companies and a significant portfolio,” the platform said.

In a blog post, Mark Lamb, CEO of CoinFLEX, claimed that there was “significant interest” in the tokens among some potential large buyers. Lamb added that if the rvUSD token issuance is fully subscribed, the platform will resume withdrawals from Thursday, June 30.

Meanwhile, the platform’s native token, FLEX, has been on a downward trend recently. It fell 47% in a single day and 80% in a week, trading at $0.917 (as of 07:30 UTC). Overall, it is up 354% year-on-year and down 88% from its all-time high of $7.56 reached last December.

1656419285 270 CoinFLEX turnaround plan akin to a scam observers say
FLEX price evolution over 7 days. Source:

Follow our affiliate links:

  • To buy cryptocurrencies in the SEPA Zone, Europe and French citizensvisit Coinhouse
  • To buy cryptocurrency in Canadavisit bitbuy
  • To generate interest with your bitcoinsgo to the website of BlockFi
  • To secure or store your cryptocurrenciesget the wallets Ledger Where Trezor
  • To trade your cryptos anonymouslyinstall the app NordVPN

To invest in cryptocurrency mining or masternodes:

To accumulate coins while playing:

  • In poker on the gaming platform CoinPoker
  • To a global fantasy football on the platform Sorare

Stay informed with our free weekly newsletter and to our social networks:

We want to say thanks to the writer of this short article for this remarkable content

CoinFLEX turnaround plan akin to a scam, observers say

You can find our social media accounts as well as the other related pages