Revix placed a hold on withdrawals of 24% of customer crypto assets in June after problems appeared with its custody partner. From Moneyweb.
Crypto investment platform Revix says it is hopeful of a ‘phased asset recovery’ after placing a hold on withdrawals of 24% of crypto assets in June.Revix implemented this hold after South Korean-based Haru Invest halted all of its crypto withdrawals earlier this year.
Haru, which is regulated in the US and EU, held customer assets as part of Revix’s crypto custody diversification strategy.
Read: Revix halts withdrawals on 24% of crypto
Crypto yield platform Haru pauses withdrawals and deposits
The recovery of assets is very much in the hands of Haru.
In June, South Korean prosecutors placed a travel ban on a number of Haru executives, including executives of partner companies Delio and B&S. Haru filed a criminal complaint against B&S Holdings in June for providing false management reports.
Haru’s perspective
In a recent update, Haru CEO Hugo Lee said the company had a plan for phased asset recovery and distribution, though he remained uncertain about timing.
“Starting with distributing assets that are already recovered, we are planning to dispose of Haru Invest’s assets; for the assets to be recovered afterward, we plan to distribute assets in several rounds.
“To note, however, as legal procedures, including rehabilitation and cooperation with investigative agencies are still underway, we are essentially unable to distribute the assets on our own,” said Lee.
“Hence, predicting and telling you the asset distribution schedule is impossible at this time; nonetheless, if the distribution timetable becomes predictable as a result of discussions with the court and investigative agencies, we will update the details.”
Adds Revix CEO Sean Sanders: “We’re still unsure of the exact timings of the legal proceedings being finalised, but the positive news is that progress is being made, albeit at a slower pace than we hoped. Our engagement with Haru’s various regulators is ongoing, with all relevant authorities actively addressing our communications.”
‘Equitable treatment’
There is concern among some Revix customers that funds were placed with Haru to earn staking rewards (or interest).
In June, Revix put a hold on 24% of all crypto investments, including non-staking assets.
In other words, 24% of all assets were frozen, even those not placed under Haru’s custody.
Sanders says the company’s approach is to mitigate custody risks of all assets under its control.
“We do this by diversifying and distributing assets across several platforms and mechanisms, each one independent of the other. This ensures an equal distribution of risk, which is to the benefit of all investors.
“This approach is in accordance with Revix’s general terms of service. This means that all Revix customers that were holding crypto assets on its platform prior to the Haru Invest announcement are proportionately affected. This approach ensures equitable treatment for all Revix customers.”
‘Sabvest not involved in Haru-Revix process or interactions’
Moneyweb reached out to Chris Seabrooke, CEO of Sabvest, which owns 11% of Revix, to see if it would make good on any potential losses arising from Haru.
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“Sabvest was one of the original minority equity investors in Revix Group, and we continue to have a small equity holding of 11% in the Revix holding company, which we have held at zero value since the year we invested in the platform,” said Seabrooke in response to questions we put to him.
“We are not involved in the day-to-day operations of Revix at all and do not comment publicly on any of the investments in our portfolio other than in our JSE results announcements and annual report. You correctly saw our latest comment in our interims released this week.
“[Regarding] Haru and the fact that it is a service provider to Revix, we were only made aware of the relationship and situation when advised by Revix in June (as Revix advised all its customers and shareholders). With regard to outcomes, we have no knowledge of or involvement in the process or interactions. Revix itself has shared the various possible outcomes that they can see with their customers and other interested parties.”
Sanders says the impairment of the Revix investment in the Sabvest financial statements is not new, but dates back several years.
In its 2023 annual report, Sabvest takes a positive view on its Revix investment, notwithstanding the Haru hold on withdrawals: “However, continued client loyalty, client growth and new technology related revenue streams are expected to enable Revix to target profitability in the next calendar year.”
Sanders says the recovery process, as a result of legal due process and the typical complexity of crypto asset recovery proceedings, will probably take several months to be resolved.
“However, as we’ve seen recently with Celsius [the failed US-based crypto company that recently settled with the Federal Trade Commission], once the process is completed, there may be a substantial recovery of assets/value.
Read:Crypto lender Celsius stops withdrawals [Jun 2022]
Celsius CEO steps down [Sep 2022]
“It’s not correct to compare Haru to Celsius just yet, as information hasn’t emerged on what exactly happened at Haru,” says Sanders.
“However, Haru has publicly communicated that it plans to distribute assets it holds, which infers that there is value to be returned.
“Revix will closely monitor all of the Haru-related proceedings and make every effort to recover the maximum amount of value for its customers.
“Revix has already engaged with several regulators, and our hope is that regulatory pressure will expedite the resolution of the matter.”
