Embattled cryptocurrency platform Paybase is launching a buy-back scheme to match the US$20 floor that their Paycoin currency was expected to hold. Announcing a system based upon “monthly disbursements” of Bitcoin to pay for any XPY re-purchased by Paybase in the scheme, the company stated that “we seek to uphold the promises we make”.
Making the announcement on the PayBase blog, the company owned by GAW is seeking to undo the damage done to its reputation since December 29 when the value of Paycoin (XPY) fell as low a US$3. By offering this scheme in which holders of XPY can sell these back to Paybase during a one month window beginning on February 1, the company will be looking to reinstate confidence in the cryptocurrency.
The scheme, however, is a staggered one, with the closing date for sales falling on March 2, and “payments from the Company to Sellers [to] be made on the first of each month.” This means that Paycoin holders won't see any payment until April at the earliest, and the minimum collective payment each month has been set to USD$100,000 by Paybase.
With a total current circulating supply of 12.3 million coins, users on Reddit have been quick to question the length of time it would take for Paybase to buy back all of XPY currency if it was placed into the new scheme, reaching a total of 200 years. More realistically, most of the currency will remain in the market with the same speculative investors who drove the early rise of Paycoin up to the highest spot as the third most valuable coin at the end of December, looking to find the gains they initially hoped for.
Paycoin is now listed as the third most valuable coin in the world! Long live Paycoin! #xpy— Josh Garza (@gawceo) December 29, 2014
Paybase itself seems optimistic that with the buy back scheme they can “re-establish the US$20 value of Paycoin through this initiative.” The value of Paycoin against Bitcoin rose slightly this morning with the news, but only to around the USD$4 mark - a price last seen on the way down back on the January 5. This is a figure some on Hashtalk have argued may have been the original investor price for the coins.
GAW CEO, Josh Garza, took to twitter to bill the announcement of the scheme as a way of fulfilling the expectation of the US$20 floor, stating that “I will stand behind my promises.” Garza has been fighting criticisms about the floor since December while posting on the Paybase blog as recently as January.
The company, in fact, distanced itself from claims that there had been a promise for the digital currency (despite deleted statements to the contrary), instead arguing it was a valuation they had placed on Paycoin based on reasoning “very much like a mathematical equation.” The failure of the currency to remain above the USD$20 mark has been often blamed upon “dumpers” selling more of the currency upon the launch of trading than had been predicted by Paybase.
However, it remains to be seen whether the US$20 buy back scheme could in fact face a similar “pump-and-dump” attack based upon any price rise associated with the scheme, leaving the currency in a worse state than before today's announcement.
Finally, founder and COO of uBITquity, Nathan Wosnack also shared his thoughts on the news:
"I believe that this highly controversial and stunning display of desperation from the Paybase for their PayCoin, demonstrates how it lacks any real traction with users. If [Paybase] has to prop this coin up, where is the value? Why not allow the market to decide its true value? This company had better act quick... my opinion is they should stop this back-back scheme at once, pay out their existing users, and offer an apology for the poorly planned, poorly executed plan. Because the visceral reaction, even outside of the often pessimistic Reddit community is one of pessimism for this company and its offering."
"This company is in the limelight, they still seem to have some opportunity to pull themselves out of this mess. They ought to use their bully pulpit; this massive media attention (albeit negative) as leverage to do the right thing and come out on top. But it will take the proper team - one lacking incompetence and greed - to pull it off."
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