Bitfinex has been in the news recently for a number of damning reasons, mostly stemming from their affiliation with controversial stablecoin Tether, who has been under investigation from the New York attorney general's office for making false claims as well as covering up significant business losses
Despite this, they are moving forward with new business developments that will hopefully put them back in the news for better reasons. For one, it was announced on June 14, 2019, that they have launched a transparency Initiative for their exchange token LEO.
The LEO transparency initiative, which is the name of the new initiative, was built around real-time token burn Redemption mechanism. This is tied to Bitfinex’s new decision to buy back tokens from the market every hour by maintaining a continuous burning mechanism. They will also make use of 27 percent of the revenue to purchase LEO at market value until all tokens are taken out of circulation entirely.
As part of their first steps, they will be burning revenues from trading fees only while expanding in the coming weeks to include all revenue streams including deposits and withdrawal fees, funding fees and further exchange products. Their dashboard will show hourly data of how much LEO was purchased by Bitfinex from the open market and how much is burned on-chain every 3 hours.
This is a way to pay back investors who purchased their token last month in a sale that brought in about $1 billion dollars. It is believed that this sale was launched as a means to recover the $850 million which was revealed to have been lost during the investigation from the attorney general's office.
The loss had initially been covered up by Tether who gave them access to their reserves for that purpose.
“We have decided upon a continuous burning mechanism – verifiable and in real-time – to keep the process as fair as possible for our users. As our revenues flow in continuously, we felt that the fairest approach to token buybacks would be one built around continuous and constant redemptions. We are doing this to remove the possibility of uncertainty from LEO holders, subsequently allowing our community to track iFinex revenues, as well as LEO token burn quantities, in an open manner,” the firm said.
Back on Top?
When the news first broke of the shady activity that had taken place between Bitfinex and Tether, there was speculation about the future of both companies and whether or not they will continue to thrive in the crypto market.
In the case of Tether, it was believed that they would likely retain their position mostly because they were one of the biggest stablecoins on the market and there is no readily available alternative to them and as such, investors will continue to back them.
The same might be true for Bitfinex as they have been seen to be actively taking steps to move away from the scandal and redeem themselves. The token sale last month was an effort in this regard as they were able to raise even more than the amount that had been recorded in losses which was a step in the right direction.
Now they are making attempts to pay back the funds had been raised and despite the investigation and the scandal that followed, both companies seem to be on the road to recovery.