Key West to end offering blue $1s at face value

dennis63

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From the Key West:
Blue $1 chips will no longer be offered for face value

I wanted to let our Key West owners here know that, effective immediately, it is no longer possible for me to offer new blue $1 Key West chips for face value. We will still have blue $1 chips available for the same price as our other denominated chips, and if you purchased blue $1 chips at face value, you can still cash them for face value, now or at any time in the future.

Classic's production costs are naturally increasing each year, and the price for a new H mold, inlaid "Level 1 chip is now north of $2 per chip.

Until now, we offered blue $1 chips for face value, $1, and had a standing offer to buy them back for their face value, $1. (That offer remains, and will always remain.)

But it's no longer possible to produce new blue $1s at current prices and keep offering them for $1 here.

The reason is simple.

We offered a limited number of those chips to people who bought large sets of Key Wests to help them cut their cost. We then invested each dollar paid for a $1 live chip into a "Peer-to-Peer" lending account through The Lending Club, which was paying between 5 and 8 percent annually. In this way, we hoped to recoup the difference between the $1 paid for each chip, and the production cost of each chip. We're not there yet.

Recently, The Lending Club announced it was closing its Peer to Peer Lending arm, and becoming a regular bank. Meanwhile, the pandemic has driven interest rates at banks to an all-time low, so there's really nothing we can put the cash into now that will yield any value.

In fact, as I write this, I'm still about $2,000 down from producing the 4,500 blue $1 chips we've already issued. I've invested my own money into the account that backs the blue $1 chips and light blue $2s, and all of those chips are still backed at 100 percent.

Questions you may have:

Q: If I have Key West blue $1 chips I bought for $1, can I still cash them for $1?
A: Yes, now and always. That part hasn't changed at all.

Q: If I really prefer Key West's blue $1 chips, can I still get some?
A: Yes. Key West will keep the blue $1 chips in the line. They'll be available for the same price as our other denominated chips.

Q: Does this mean I need to cash in my blue Key West $1 chips for their face value?
A: No. You'll always be able to do that.

Q: If I buy some blue $1 chips in the future for $1.79 and cash them in, what will I get for them?
A: $1 in cash, since we really won't know what you paid for them.

Q: So all blue Key West $1 chips will still be cashable for $1?
A: Yes.
 
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JMC9389

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Sad but not at all unexpected given current circumstances. Thank you for everything you continue to offer to the community, Dennis!
 
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dennis63

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Sadly, this was scheduled to happen soon, anyway.

My original plan was to stop offering $1 chips at face value when we had issued 5,000 of the chips. We're almost there now.

I would also point out that when the offer was originally made, I requested that people pay an actual dollar for each $1 chip they bought. This was largely ignored and went by the wayside, and after running the transactions through PayPal, I ended up with about 94 cents for each $1 chip issued after paying PP fees on the chips and cost of shipping, and still owed the buyer $1 cash.

The plan was designed to end. The pandemic and its economic impact hastened it, as there is now no way to invest the cash in anything liquid and get any return at all. So there's simply no way to get back the production cost.
 
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