Well if the last week of April was all about the Tether and Bitfinex controversies, the start of May has begun with another news coming from Bitfinex. It appears that that the exchange may be heading to and IEO at least as per the document shared by Zhao Dong, the founder of DGroup, on his Weibo account.
LEO tokens to be regularly destroyed in a monthly repurchase manner
Well, Zhao Dong, the man-in-charge of DGroup and a prominent shareholder in Bitfinex, is slowly becoming a messenger of critical news coming from the exchange’s corridor. Recently using his Weibo account, shared a document which perhaps is the IEO white paper of Bitfinex.
The whitepaper is quite insightful and states that Bitfinex will be launching its own exchange tokens, named LEO. Bitfinex’s participation in this IEO is divided into private placement (as of May 10, 2019) and public offering (after May 10, 2019). Private placements are only for those who receive the IEO white paper, and public offerings will only take place when private placements are insufficient and there is still a share of tokens remaining. According to certain media houses Zhao Dong has put forward that Bitfinex already raised $600 million in private but only verbal commitments.
The white paper gets a little more interesting as it mentions that one of the major reasons for issuing the exchange tokens at this particular time is because the company’s $850 million funds are currently frozen in several accounts controlled by the payment processing company Crypto Capital. This could be linked to the April end controversy where the New York Attorney General (NYAG) sued Bitfinex and Tether for commingling funds to cover a loss of $850 million.
However, Bitfinex states in the white paper that it is “actively collaborating with the legal investigation and applying to unfreeze these funds through legal procedures.” And the company is “confident that it will retrieve these funds,” according to the white paper.
Based on this document, we can summarize the following main points (loosely translated from Mandarin):
- IEO Release Background: At the end of 2018, iFinex & Bitfinex’s $850 million assets deposited with payment partner Global Trading Solution were frozen, and Bitfinex’s loan from Tether solved the problem of capital flow.
- LEO token parameters: a total of 1 billion LEO tokens, with a token code of LEO, will be offered for global distribution
- LEO economic model: LEO will regularly be destroyed in a monthly repurchase manner. Source of funds for repurchasing and destroying LEOs would be as quoted in the white paper that stated
“The frozen ($ at least) 95% of the frozen $850 million will be used to repurchase and destroy LEO. ·
- LEO token usage scenarios: The paper states that LEO could have following use cases which include 1. Bitfinex transaction fee 2. Bitfinex lending fee 3. Bitfinex withdrawal and recharge fees, etc.
With Bitfinex own proprietary token, which could be on lines of BNB, will make this space more competitive. All eyes are now on May 10 when it would be clear of what actually is IEO once it is opened to the public.
Will Bitfinex succeed in its IEO and launching LEO tokens or are we heading to another Tether like a problem? Do let us know your views on the same.
Nilesh Maurya has been associated for past 8 years as an Investment Banker with Omega Capital, a bespoke Investment Banking outfit having offices in Mumbai, New York, Singapore, and Dubai. He has been a regular contributor to business publications such as Business India and Market Express and has been a mentor to many start-up companies. Nilesh Maurya has been associated for past 8 years as an Investment Banker with Omega Capital, a bespoke Investment Banking outfit having offices in Mumbai, New York, Singapore, and Dubai. He has been a regular contributor to business publications such as Business India and Market Express and has been a mentor to many start-up companies. Follow him on Twitter at @KoinKing1 or connect with me on linkedin.