Cryptocurrency exchange CoinFlex has announced a plan in which creditors will own more than half of the share of the company. Under the restructuring plan, creditors will own nearly 65% of the company. Although, a vote on the proposal is scheduled for the next week.
"Creditors will own 65% of the Company, and we are excited about our new shareholders and the support they bring," said CoinFlex.
Series A Shareholders Will Lose Their Equity Stakes
The crypto platform stated that Series A shareholders of the company will lose their equity stakes, including us. While the Series B shareholders will continue to be shareholders.
Team Will Be Allocated 15%
The team will be allocated 15% in the form of an employee share option plan (ESOP) which will vest over time. "It is important that the team gets CoinFlex back on track and grows the business with all your support," said CoinFlex.
Creditors to Own 65% of Company
"As with any reorganization, unfortunately, most shareholders get wiped out. This situation is no different," added the company.
CoinFlex filed for restructuring in Seychelles last month as it sought to resolve a shortfall due to a counterparty failing to make a margin call. The exchange froze withdrawals in June after the counterparty, which it identified as crypto investor Roger Ver, failed to pay a margin call. Ver, however, denied he defaulted on debt owed to CoinFlex, according to Bloomberg.
Approval of 75% of Creditors Is Needed
Under the current plan, the approval of 75% of creditors is needed. And if it's passed, CoinFlex will be required to submit it to the Seychelles Courts for reorganization approval. On another condition, if it fails to pass, the company will work on the terms again.
A number of crypto firms have filed for restructuring after a lot of cryptocurrencies' values plunged 60% of their original value in recent months.