CEO’s official statement
Dear CoinLoaners,
You may consider this post long overdue, but the sheer number of unknowns we have dealt with made waiting until today a necessity. This legal impediment came with uncertainty and lack of guidelines about too many procedures, from classifying assets to planning further steps with outstanding clients’ loans. We have fully devoted ourselves to finding a way out, and this required extreme caution with public statements. Now, we are ready to inform you about the current state of affairs resulting from a Notice of restraint on disposition received on April 24, 2023.
Last year’s turmoil — the longest and harshest crypto winter — posed immense challenges for the crypto industry. However, we firmly believed CoinLoan would remain an exception, despite not having any government backing or access to the same market and legal frameworks as banks. The regulatory pressure, uncertainty, and the extreme bank run accompanying the domino-effect collapses of crypto businesses made limiting daily withdrawals inevitable. This measure allowed CoinLoan to stay generally operational with the most modest limitations for clients this situation allowed.
We strived to remain among the few crypto lending platforms still standing and tirelessly searched for ways to overcome the fallout. Our clients’ interests remained the top priority despite the headwinds.
I have directed all my efforts, time, and resources to keeping the company afloat and stabilizing its position in the market. I was confident that CoinLoan would withstand the ordeal without resorting to bankruptcy procedures. Filing for like other crypto companies — throwing in the towel — would have been the easiest solution.
Our team’s commitment is what kept CoinLoan viable long after so many of our competitors had gone under. I have tremendous gratitude for the support I got from the CoinLoan family.
Understandably but unfortunately, the above-mentioned withdrawal limits did not resonate well with some of our clients, ultimately leading to the present lawsuit. The decision of the Estonian court deprived us of any opportunity to pay reasonable fees to all third-party providers (including salaries to employees and lawyer fees) without the consent of the interim trustee (we asked for it repeatedly, but all our reasonable and legit requests were either ignored or declined without any justification). This forced us into a situation where any resources for our defense were significantly limited. Reaching any settlement with the creditors on better terms than they would get as a result of the upcoming bankruptcy was impossible.
At the time, the company was in the process of altering its legal structure to meet dynamically changing regulations worldwide. Estonia had tightened regulations for crypto companies and practically "expelled" all crypto projects, leaving only a handful with a very simple business model.
Partly for this reason, our licenses for crypto activities in Estonia were voluntarily revoked. However, this transformation was unfortunately not completed, as the crypto-lending business model is the most complex in terms of regulation, and there is still almost no clear understanding anywhere. This court decision caught us off guard, leaving no alternatives.
Eventually, we were faced with only one option which the applicable law in Estonia requires — providing the interim trustee with information about our clients along with assets and liabilities (in particular our clients' claims). As of June 5, 2023, CoinLoan OU holds assets with a value of approximately 68 million euros, not including CLT. This amount is approximate and distributed among 9,826 clients. Our liabilities to clients are valued at roughly 206 million euros.
This amount is insufficient to fully cover all liabilities at once due to the current market conditions and unrealized loss on investment positions. Nevertheless, these assets belong to our clients, and we will facilitate their return to the extent possible by the applicable law. However, after the upcoming court hearing, we, most probably, will have no control over this, and the bankruptcy trustee will take over the decision making for the company.
What's next?
On June 7, 2023, at 11:00 a.m. local time, a court hearing will be held in Harju County Court. As a result of this session, our company will almost certainly be declared bankrupt. We will accept this outcome and facilitate its execution, as we have always done our best to comply with all applicable regulations and sought external professional advice when necessary.
Once this decision has been taken, we urge all clients to inform the appointed interim trustee of their demands in order to be included in the registry and receive a share of the assets. We will keep all accounts on the platform functional, so everyone can receive a confirmation of their current balances. Afterward, we will do everything in our power to ensure CoinLoaners receive as much of their assets as possible and as fast as possible.
We have always maintained open communication. CoinLoan’s Telegram chat was launched together with its platform, and we are going to keep it. Therefore, besides the official support, I invite all users to join the Telegram community to connect to other CoinLoaners and our team, which is always ready to address inquiries and provide the necessary assistance. As CoinLoan CEO, I try to devote my attention to every message.
The current situation affects all users. You have placed your trust in CoinLoan, and I apologize for this unfortunate series of events and its impact on your assets. We are preparing a more detailed post outlining the situation, which will be available soon. Further relevant updates and instructions will be published in a timely manner.
Alex Faliushin
CoinLoan CEO
Without prejudice disclaimer. Nothing contained in this Blog (or published by CoinLoan otherwise) shall be interpreted and used against CoinLoan or be detrimental to any of its rights. All information publicly disclosed by CoinLoan herein or elsewhere shall be without prejudice to (i) any CoinLoan's rights or interests whether addressed in this Blog or not, and (ii) any position that CoinLoan may take in legal or administrative proceedings.