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Who is CoinFLEX's mystery debtor?

Jun 28, 2022
A question mark formed by digital blocks

Illustration: Gabriella Turrisi/Axios

CoinFLEX, a crypto lender, is planning to sell about $47 million in tokens in the hope of restarting withdrawals, CEO Mark Lamb wrote in a Tuesday blog post.

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

Why it's the BFD: CoinFLEX halted withdrawals about a week ago after a single, major, longtime customer failed to repay debt — highlighting the weak risk-controls dogging several crypto lenders.

Details: CoinFLEX isn't disclosing the customer's identity, only that this "individual is 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."

  • Usually, CoinFLEX says it would auto-liquidate the customer's position, but the two sides had an agreement that prevented that from happening.
  • The company has previously said the customer is not the beleaguered hedge fund, Three Arrows Capital.

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

Why (the customer's identity) matters: CoinFLEX plans to payout rvUSD holders primarily via this one customer repaying debt. And without a clear idea of who the customer is, rvUSD holders will have to trust CoinFLEX's trust in said customer. And, again, there's no guarantee CoinFLEX will be repaid in full.

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