Most crypto companies are using different ways to reduce expenses to survive this bear market. One of those companies is CoinFLEX, a famous and highly used cryptocurrency exchange platform. As per the reports, CoinFLEX lays off staff from all the sectors and geographies to reduce their company’s expenses by up to 60 percent and increase their profit margins. The exchange stated that the intention is to attain the correct size as a company.
Now, the majority of their team members are focusing on the product as well as their technology to add some value to the customers. The company also mentioned that they will consider scaling up as “volumes come back.”
Issues with CoinFLEX
Recently, CoinFLEX has been in the limelight for halting user withdrawals when a party reportedly failed to meet up a 47$ million margin call. However, the exchange CEO Mark Lamb used Twitter to confirm these rumors. Even after the incident, CoinFLEX partially reopened money withdrawals for their users on the 14th of July. But, users started expressing their concerns about the exchange’s insolvency issues with different networks.
Estimates later reported that the exchange shortfall could go up to 84 million dollars, which has already begun the arbitration procedures in the HK. It indicates that the crypto exchanges are facing difficulties and have forgotten risk management basics.
CoinFLEX recovery plans
Following its issue with the user withdrawals, the exchange said its current plan to fix the liquidity shortage is by issuing a new token, known as Recovery Value USD or rvUSD. It comes after the exchange paused the withdrawals for the users last weeks, creating uncertainties involving a counterparty.
In reply to the situation, the exchange published a blog post on Monday with some extra information about their counterparty. In the post, the CEO stated that an old customer account went to negative equity, which led them to halt user withdrawals. The post also stated that the exchange would automatically liquidate the positions of the investors in such a case, but the trader had a clause in their account which did not allow it to happen.
What are your thoughts as CoinFLEX lays off staff to reduce expenses? Do you also think exchanges are forgetting the basics of risk management? Let us know in the comments below. And, if you found our content informative, do like and share with your friends.
Also Read: El Salvador’s finance minister is positive about Bitcoin despite the market downturn
