Bitfinex IEO Gathers Pace and Divides Community

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Bitfinex and Tether has been almost the sole topic of conversation in crypto circles ever since the New York Attorney General’s office announced that they were investigating the exchange’s owners, iFinex, for using Tether funds to cover an $850 million shortfall. iFinex has moved quickly to try and raise the funds needed to fill the Jupiter-sized hole in their accounts by rushing out an Initial Exchange Offering (IEO) for a Bitfinex exchange token, named LEO, that they hope will net them $1 billion. This money will be used to fill the hole and would in a single stroke ensure that each USDT is, once again, 100% backed by fiat, potentially ending the fear that has hung over the community about Tether’s solvency for years.

LEO ‘Whitepaper’ Circulated

Over the weekend a “marketing document”, which looked very much like a cobbled together whitepaper, was circulated to potential investors describing the mechanics behind the LEO token. These include the usual exchange token fare, such as reduced crypto to crypto trading fees, but will also reportedly allow reduced lending, withdrawal, and deposit fees for Bitfinex and future iFinex endeavors. As of Saturday, over $600m worth had already apparently been snapped up by private investors, with keen interest from China, meaning that a public sale is highly unlikely.

Not Everyone Convinced

The response to iFinex’s seemingly hasty actions has been mixed, with some accusing it of being a money grab and a scam, while others suggested it might be worth a punt, if they can get in:

“Short Term Negative Impact”

A key component of the deal is that the tokens will all be bought back and burned on a monthly basis once the $850 million currently frozen in several accounts by payment processing company Crypto Capital is released. Fundstrat’s Tom Lee has warned that the IEO will have a temporary destabilizing effect on Bitcoin as “$1 billion IEO is a lot of “new” token supply and probably has a short-term negative impact on $BTC #bitcoin and other crypto as the market needs to absorb this supply…” With the private sale due to end on Friday we don’t have long to wait until the next chapter of the Bitfinex/Tether saga is written, any nobody knows what’s coming next.