CoinFLEX’s rvUSD Token Is Pushing The Risk Of This Exchange To Users?
CoinFLEX, the cryptocurrency exchange that blocked withdrawals last week, has announced it will issue rvUSD tokens representing a $47 million debt owed by a whale. Does paying too much interest to turn this token into a Ponzi scheme? Will the exchange’s risk be passed on to the users?
Is CoinFLEX pushing risk to users?
As updated in an article by Coincu News, the cryptocurrency exchange CoinFLEX that blocked withdrawals early last week is now releasing a new token called rvUSD. This token was claimed by CoinFLEX to be created to compensate users for a $47 million loan that was being swindled by a customer “whale” of the exchange.
rvUSD will have the same value as 1 USDC, with an open sale of 47 million rvUSD. For motivation, CoinFLEX claims to pay 20% APR interest/year. The money is spent daily in the form of rvUSD, and the exchange’s FLEX token bonus is received. The exchange also sets requirements to ensure that buyers have sufficient financial strength to bear the risk, including non-US citizens, with an annual income of $200,000 or more/assets of $1 million or more up and already KYC on the exchange.
CoinFLEX is in fact in big trouble. The exchange said the “non-liquidate position” was most likely a loan transaction for a whale without collateral. When the whale does not pay, the exchange will lose $ 47 million. But instead of accepting that, CoinFLEX will “tokenize” this debt and push it to users, turning itself from creditor to user to creditor. The money collected will be used to solve the withdrawal needs of users by the target on June 30, showing how the exchange is lacking in liquidity to have to use that move.
It is not unheard of for a crypto exchange to issue debt tokens. In 2019, the Bitfinex exchange gave a debt token called LEO to raise $ 1 billion to compensate for the amount that the exchange had a deficit and had to borrow Tether (USDT). However, LEO at that time only represented the amount of money lost, not committed to paying high interest to the holder.
However, the fact that CoinFLEX pays very high interest for rvUSD is being criticized by many as a Ponzi scheme, as well as setting a bad precedent for other organizations in the context that many units are also being “hungry for money”.
DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
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CoinFLEX’s rvUSD Token Is Pushing The Risk Of This Exchange To Users?
CoinFLEX, the cryptocurrency exchange that blocked withdrawals last week, has announced it will issue rvUSD tokens representing a $47 million debt owed by a whale. Does paying too much interest to turn this token into a Ponzi scheme? Will the exchange’s risk be passed on to the users?
Is CoinFLEX pushing risk to users?
As updated in an article by Coincu News, the cryptocurrency exchange CoinFLEX that blocked withdrawals early last week is now releasing a new token called rvUSD. This token was claimed by CoinFLEX to be created to compensate users for a $47 million loan that was being swindled by a customer “whale” of the exchange.
rvUSD will have the same value as 1 USDC, with an open sale of 47 million rvUSD. For motivation, CoinFLEX claims to pay 20% APR interest/year. The money is spent daily in the form of rvUSD, and the exchange’s FLEX token bonus is received. The exchange also sets requirements to ensure that buyers have sufficient financial strength to bear the risk, including non-US citizens, with an annual income of $200,000 or more/assets of $1 million or more up and already KYC on the exchange.
CoinFLEX is in fact in big trouble. The exchange said the “non-liquidate position” was most likely a loan transaction for a whale without collateral. When the whale does not pay, the exchange will lose $ 47 million. But instead of accepting that, CoinFLEX will “tokenize” this debt and push it to users, turning itself from creditor to user to creditor. The money collected will be used to solve the withdrawal needs of users by the target on June 30, showing how the exchange is lacking in liquidity to have to use that move.
It is not unheard of for a crypto exchange to issue debt tokens. In 2019, the Bitfinex exchange gave a debt token called LEO to raise $ 1 billion to compensate for the amount that the exchange had a deficit and had to borrow Tether (USDT). However, LEO at that time only represented the amount of money lost, not committed to paying high interest to the holder.
However, the fact that CoinFLEX pays very high interest for rvUSD is being criticized by many as a Ponzi scheme, as well as setting a bad precedent for other organizations in the context that many units are also being “hungry for money”.
DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
Join CoinCu Telegram to keep track of news: https://t.me/coincunews
Follow CoinCu Youtube Channel | Follow CoinCu Facebook page
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