The CeFi no longer knows where to go – The price of Bitcoin (BTC) and other cryptocurrencies recorded a sudden fall, those last weeks. This impacted both individual and institutional investors. So after Celsius Where BlockFiit’s the turn of Coinflex to find oneself in the heart of the turmoil.
Small on Coinflex and its flexTokens
Coinflex is a cryptocurrency exchange platform automated market maker (AMM). At the same time, it also offers multiple tokenized assetssuch as flexBTC, flexETH or flexUSD.
In practice, these assets can be created by depositing the token they represent on the Coinflex platform. For example, flexUSD is a USDC-backed stablecoin. Therefore, users can deposit USDC on the platform to create flexUSD tokens. Moreover, the flexUSD allows its holders to generate a yield variable ranging from 2 to 18% annualized.
Unsurprisingly, the returns are generated by lending the deposited assets.
“flexUSD tokens earn interest by lending USDC (held as CoinFLEX reserves) in contracts on the platform’s perpetual futures market. »
We imagine you see the problem coming. Indeed, this type of model, although theoretically viableshowed his limitsin recent weeks, due to the fall in the crypto markets.
Withdrawals on Coinflex: suspension is in fashion
The inevitable happened. On June 24, Coinflex announced the suspension of withdrawals on its platform. As a result, users are unable to withdraw the funds they had deposited on Coinflex.
Obviously, Coinflex justifies this suspension by the “extreme market conditions” recorded in recent weeks. In fact, in its announcement, the platform invokes “uncertainties regarding a counterparty”.
Neither one nor two, Coinflex defuses the bomb. Indeed, it adds that the said “counterpart” is not the sulphurous investment fund Three Arrow Capital. She adds that it is not a lending service either, clearly referring to Celsius, BlockFi or Babel Finance.
“To confirm, the counterparty is not Three Arrows Capital or any loan company. We are convinced that this situation can be remedied quickly. »
Subsequently, the platform announces that it will return on June 27 with more information and plans to reopen withdrawals on June 30. She stresses all the same that these dates are not “only estimates based on our current understanding of the situation”.
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CeFi platforms fall one by one
The recent fall in the cryptocurrency market has shed light on the risky practices many players in the CeFi ecosystem. So, as it is said so well warren buffettit is when the sea recedes that we see those who bathe naked.
Indeed, in turn, various departments of the centralized finance (CeFi) find themselves in turmoil. It all started with the lender Celsius forced to block withdrawals due to a lack of cash caused by unfavorable market conditions.
This was closely followed by Babel Finance, also forced to suspend withdrawals on its platform. The platform subsequently denied insolvency rumorsby revealing that it had negotiated with its creditors a strategy to reduce liquidity pressure.
Our 2 friends were quickly joined by giant BlockFi, which did not suspend withdrawals. However, the latter had no choice but to obtain a ready with the exchange platform FTX to replenish the coffers.
On his side, Sam Bankman-Friedfounder of FTX and Alameda Reseach is positioned as great savior of the ecosystem. Indeed, Alameda like FTX are increasing their interventions to help companies in decline. For example, FTX recently got BlockFi out of trouble by granting it a loan of $250 million.
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