Bitfinex Releases White Paper to Conduct $1 Billion Initial Exchange Offering (IEO) to Cover Frozen Funds
The cryptocurrency exchange Bitfinex will be conducting an Initial Exchange Offering (IEO) that aims at raising $1 billion. The intention is to use the funds to provide liquidity to the company.
Some funds were frozen by authorities in different countries, including Poland, Portugal and the United States.
Bitfinex Wants To Gather $1 Billion
Bitfinex is clearly not experiencing a good moment. The company has $850 million in funds frozen in accounts located in the aforementioned countries. According to an excerpt of a white paper that The Block received, Bitfinex is going to be launching tokens called LEO to private investors.
The whitepaper was posted by the shareholder Zhao Dong that explained that Bitfinex raised $600 million in private, verbal commitments. Bitfinex experienced a difficult situation last week when the New York Attorney General (NYAG) sued Bitfinex and Tether after the first used funds from the latter to cover the loss of $850 million. The new tokens are going to be called LEO and they will be offered to private investors. Additionally, there would only be an IEO only if there are tokens that were not sold during the private round.
Tether (USDT) is the most popular stablecoin in the market that allows users in the cryptocurrency space to hedge against fluctuations. Nonetheless, Tether has experienced very difficult situations in the last few years due to the funds that the firm behind Tether had to back the 1:1 peg.
The firm is working in order to unlock the funds that these countries have frozen collaborating with the legal investigation. They are confident, according to the white paper, that they will be having these funds back.
Bitfinex will also be buying the tokens on a monthly basis at a market price. The firm will be using 27% of the profits from the previous month. This is similar to what Binance does every single quarter.
Zhao Dong mentioned that even if the seized money cannot be retrieved, following the profits that they had between 2017 and 2018, the firm would be able to buy back all the tokens issued to the market in just 4 years. LEO tokens will also be used to offer trading fee discounts, like the Binance Coin (BNB).
Bitfinex Official document about the LEO token pic.twitter.com/YR5FdS4iUY
— [email protected] (@zhaodong1982) May 4, 2019
Although this is called a “white paper” it is not exactly one. It is just a document that does not specify any technical thing regarding blockchain systems or the new cryptocurrency.