Troubled Exchange Raising $1B USD in Token Offering
While ICO's were the biggest rage of 2017, it seems that IEO's are 2019's trend. Many if not most exchanges have decided to issue their own native exchange token. Nearly every exchange today has issued a token. This includes Houbi, Kucoin, and LAToken to name a few. Some have had great success with the launch of their token. Binance for example, managed to not only succeed with the fundraising aspect of their token but also managed to turn it into one of the top ten coins by market cap.
Many have wondered when will Bitfinex issue their own token. Recently, after being embroiled in scandal and being sued by the State of New York, Bitfinex has announced that it will launch its own exchange token.
In Case You Missed Out
Bitfinex apparently had $850 M frozen by various governments. This caused it to struggle with client pay outs. Tether which has very close ties to Bitfinex, loaned Bitfinex $900 M to maintain operations. The $900M was taken from Tether's fiat reserves and caused it to break it's "1 Tether is backed by $1" promise. In truth, 1 Tether was only backed by 74% of a dollar following the loan, and the public & shareholders were left in the dark. The New York Attorney General has been investigating Tether & Bitfinex for fraud and other allegations since.
Yesterday, an official document outlining the token sale was released via Twitter. Apparently Bitfinex plans a $1 B token sale. It is important to note that the document was not a white paper, but a summery, meaning that things can change.
In the document, all funds raised will be in the form of Tether.
The LEO token seems to function in a similar manner to Binance's BNB token. It will offer token holders discounts on trading token pairs, up to a 25% discount on withdrawal and deposit fees and other benefits.
The Bottom Line
Some on Twitter have accused Bitfinex of running an IEO as a form of ponzi scheme. Most notably the user @Bitfinexed who has leaked quite a bit of information on the unraveling scandal. They claim that the token sale is only done to cover the $850 M in frozen funds.
While this might be true, many others still fully support Bitfinex and Tether. Highly Influential user @Excellion and others have demonstrated support for the IEO.
Regardless of what the future holds for Bitfinex and Tether, the IEO will apparently be a fundraising success.
Written by Jonathan Ganor
Writer & cryptocurrency aficionado