Beleaguered cryptocurrency exchange CoinFLEX has released a restructuring plan more than a month after filing it with a Seychelles court. It was one of several companies that had restructured following the crypto crash earlier this year.
According to the latest blog post, CoinFLEX’s creditors will own 65% of the company, while all existing Series A and common shareholders will lose their equity stakes. The CoinFLEX team will be allocated 15% in the form of an employee stock option plan that will vest over time, according to the statement. The reason is to help the team “get back on track” and grow the business.
On the other hand, Series B investors will continue to be shareholders of the reorganized business and will be incentivized with future equity. A vote on the new proposal is scheduled for next week and will require the approval of 75% of creditors for the value of CoinFLEX’s CFV token.
Restructuring plan
If the proposal is approved, the exchange will submit the term sheet and supporting documents to the Seychelles courts to approve the reorganization. If it doesn’t, those involved will have to amend the terms and then go back to all creditors for a second round of votes to seek approval.
If the reorganization plan gets the green light from creditors, satisfies the judge and the terms are met, CoinFlex estimates the process will take up to six weeks.
“We fully recognize that this has been a traumatic experience for all of our depositors and stakeholders. We hope that with a successful reorganization, we will get back on track to grow and become a successful exchange. It will not be a day by day, nor will it be easy, but with the support of our new army of shareholders, you, we have every chance of achieving this goal.”
The proposal also mentions that the BCH Alliance will take responsibility for the SmartBCH bridge and use its own BCH to exchange sBCH tokens held by DeFi SmartBCH users on a 1:1 basis. Meanwhile, creditors will receive recovery value USD (rvUSD), equity and USDC stablecoin.
The fall
In late June, CoinFLEX announced a halt to withdrawals from its platform as a result of “extreme market conditions” and “continued uncertainty involving a counterparty.” Platform co-founder Mark Lamb later identified BCH backer Roger Ver as the counterparty and accused him of defaulting on a $47 million loan.
However, Ver rejected the allegations and instead attacked CoinFLEX, claiming that the investment platform owed him money. The amount was later revised to $84 million, and the exchange entered into arbitration with Ver in a Hong Kong court.
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