(Bloomberg) -- Cryptocurrency exchange CoinFlex has detailed a restructuring plan in which creditors will own 65% of the company, with a vote on the proposal coming over the next week.
Existing ordinary and Series A shareholders will lose their equity stakes, while the CoinFlex team will be allocated 15% in the form of an employee share option plan that will vest over time. Series B investors will continue to be shareholders and will be incentivized with future equity, a statement showed.
“As with any reorganization, unfortunately, most shareholders get wiped out,” CoinFlex said. “This situation is no different.”
A slew of crypto firms have folded or gone into restructuring, hurt by the slump in digital assets this year, including a 60% plunge in the largest coins.
CoinFlex filed for restructuring in the 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.
Read more: ‘Bitcoin Jesus’ Roger Ver Spars With Exchange Over Margin Call
A vote on the new proposal will occur in the next week, with approval of 75% of creditors by value of CoinFlex vote tokens held needed for passage. If it passes, the company will present it to the Seychelles Courts to approve the reorganization, CoinFlex said. If it doesn’t pass, they’ll rework the terms and come back again.
Other aspects of the proposal include:
- The BCH Alliance will assume the responsibility of the SmartBCH Bridge and use its own BCH to exchange the sBCH Tokens held by the DeFi SmartBCH users on a 1:1 basis.
- Creditors will get rvUSD, equity, and USDC.
- FLEX Coin isn’t being distributed as those tokens may be used for marketing and other purposes, and it was believed creditors “would have a better outcome” if FLEX is owned by the company as opposed to distributed out.
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