RChain Cooperative may have to liquidate RHOC's holdings to stay solvent

An October balance sheet badysis of the RChain Cooperative suggests that the organization is insolvent, with its liabilities largely exceeding its liquid badets. To meet its obligations, the organization may need to liquidate a large portion of its badets in RHOC or find an alternative way to renegotiate or refinance its obligations, giving credence to allegations that the organization would be in functional bankruptcy ".

RChain's decline?

RChain is a blockchain project that promises to use the "rho calculation" to solve EthereumProblems of scale. Among the personalities working on the project are lead Ethereum researcher Vlad Zamfir and former Microsoft software architect Lucius Gregory Meredith.

In January 2018, the RChain RHOC token was trading at over $ 2.80. Now, each token is worth less than $ 0.03, with the company's market capitalization ranking increasing from 30th to 227th.

The price drop may be due to a series of allegedly bad financial decisions, including the purchase of a 5-year audio codec license from Immersion Networks for $ 23.5 million. dollars, which could lead to insolvency.

Property and ICO

Initially RChain's sale of RHOC to private communities raised $ 30 million, while retaining an important reserve to continue funding ecosystem development. The rest of the organization's badets are either held in cash, other cryptocurrency, or real estate.

The readily available badets include $ 2.2 million in cash and approximately $ 1.5 million in liquid cryptocurrencies. The company could also liquidate its $ 1.5 million property, which would be a "home in Seattle for co-op members," according to the Block Crypto. These badets total approximately $ 5.2 million.

The organization also claims that it holds about 480 million RHOCs. CryptoSlate contacted RChain Cooperative about its current holdings in RHOC and received the following response from Derek Beres, Co-op Content Manager, providing the following numbers:

410.7 million RHOCs sent to reserve wallet RCM (RChain multisig), 50.6 million euros sent for the symbolic sale walletand 4 million sent to research wallet, for a total of 465 million RHOC.

Based on these current figures, the organization's reserve of 465 million RHOCs would currently be valued at approximately $ 13 million, compared with $ 63 million.

However, the daily volume for RHOC varies between $ 90,000 and $ 400,000, indicating that the liquidation of all of RHOC's $ 13 million is impossible without significant slippage, which means that it is unlikely that RChain Coop receives the full $ 13 million if it sells its badets.

In the footnote to the financial statements, the cooperative even states that "RHOC is not easily transferable and illiquid as a monetizable badet," reaffirming this possibility again.

Current liabilities

Short-term liabilities are financial obligations that RChain Cooperative is required to pay within 12 months.

RChain's contractual obligations – agreements likely to be renegotiated – include $ 5.6 million for "Immersion", which is probably one of the payments for audio codec rights previously mentioned – 2, $ 2 million for "Strategic Management Fee Partnership" with "Reflective Ventures". a blockchain-specific private equity fund that works closely with the organization – and $ 3.6 million for "Pyrofex", a contract development firm at blockchain responsible for building most of RChain software.

At the same time, non-marketable liabilities are mainly related to taxes. The co-op estimates $ 3.5 million in income taxes payable for 2017 and has not yet released the 2018 income tax estimates and income taxes from the sale of RHOC.

Other notable but less significant liabilities include $ 393,000 in "Founder Remuneration" and $ 120,000 in "Website". Overall, it is not clear which liabilities are renegotiable.

These liabilities total at least $ 16 million, not counting pending tax estimates. Composed of $ 5.2 million of accessible badets, this results in a deficit of at least $ 10.8 million contractually payable in less than 9 months.

If the co-op is unable to pay its debts using its accessible badets (which will not be based on the October numbers), then the organization will have to renegotiate its contracts, find additional financing or wind up a part of it. of its 465 million RHOC. stay solvent–Or all the above.

CryptoSlate contacted RChain Cooperative Chair Lucius Gregory Meredith to share his comments on some of these concerns and has not yet received a response.

Leadership Rotation

Earlier, Medha Parlikar, lead developer, Kate Gonsalves, chief financial officer, and three other board members had resigned from the co-op's board of directors. On February 14, the director of operations, Kenny Rowe, announced his resignation.

Rowe was the co-founder of MakerDAO and the advisor of Aragon with experience in "sustainable governance". When asked to comment on his motives, Mr. Rowe replied:

"I was offered another opportunity that was better for me and my family."

The high turnover in RChain's direction may suggest that the organization is in trouble. Combined with the potential financial difficulties of the organization, RChain Cooperative could be in trouble for 2019.

Keywords