A trader found a vulnerability and left more than $50 million in debt when he abruptly left the platform last week. The company has had trouble paying customers ever since.
CoinFLEX, a cryptocurrency exchange, has suspended withdrawals and is trying to pay customers back by issuing $47 million worth of tokens.
The company initially froze withdrawals last week after losing more than $50 million in a hack. On Monday, the company posted on Twitter that it would reimburse customers by issuing new tokens (although it did not specify whether these tokens would be redeemable for fiat currency). However, this move has raised questions about whether CoinFLEX can provide enough liquidity to its customers to trade these newly issued tokens.
The company is currently facing lawsuits from several investors who claim that the company’s activity constitutes securities fraud. In an attempt to avoid paying the $47 million it owes to investors, CoinFLEX has decided to issue its own tokens as a way to pay off those debts. The tokens will be redeemable for $1 each and will be issued in equal amounts to each user who has made a withdrawal request before today.
The exchange has made this decision in response to a recent hack that has resulted in the loss of $47 million worth of tokens. The company is currently working on a solution to return those funds to their rightful owners.
We are planning to issue tokens as part of our solution.
Mark Lamb
A CoinFLEX spokesperson said this decision was made as part of an effort “to ensure the safety of our customers’ assets.”
Chief Executive Officer Mark Lamb said: “We have been working closely with our legal team to find a solution to this case. We are now planning to issue a token as part of our solution.”
The company says it plans to launch the token and resume withdrawals this week.
“ We are happy to announce that we have found a way to address this situation,” said Mark Lamb, CEO of CoinFLEX. “We owe it to our customers and our community to protect them from any further harm.”
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