The past year has been a rollercoaster ride for the prices of cryptocurrencies. While Bitcoin was believed to be dead, again (lol), the crypto trading exchanges started leveraging their resources to launch their own native tokens. Exchanges those like Binance, Huobi, and OKEX have offered trading discounts and buy-back programs to encourage their audience to hodl crypto assets.
Amongst this, Bitfinex introduced the launching of UNUS SED LEO tokens along with the release of LEO burn mechanism. The initiative is built “around a real-time token burn redemption mechanism”. As per their official blog, the burn mechanism will see “iFinex gross revenues allocated to purchasing circulating LEO tokens at market rates”.
LEO is a utility token which will be used by customers across the iFinex brand such as Bitfinex, EOSfinex, ETHfinex and more.
Additionally, Bitfinex also stated that
“To complement the launch of the UNUS SED LEO burn mechanism, we have launched the ‘LEO Transparency Dashboard’, providing real-time insights into all collected platform fees, and subsequent LEO burns.”
Bitfinex has claimed that they will buyback [Buy their LEO tokens back] every month by using 27% of its revenue generated. Not just this, they will also be providing LEO token discounts on the fees for buying, selling, withdrawing, lending etc.
According to the information provided by Bitfinex, on 20th May, Bitfinex raised $1 billion USD by selling out its LEO token in less than 10 days. The token was sold at the price of $1 per token. Which at the current time of writing is worth $1.86 and ranks as the #13 largest cryptocurrency on CoinMarketCap.
While this happened, the community started speculating how Bitfinex was still in a position to carry such activities out despite of the controversies its indulged in.
For the longest time, Bitfinex allowed New York residents to trade on its platform disrespecting the law effective from 8th August, 2015 which states that any crypto exchange that wants to deal in NY needs to have a BitLicense. This was not followed by Bitfinex and ever since then it has been on the blacklist. In the past, it also has been reported that Bitfinex has $800M missing in fiat, which had been confiscated by government officials for cases related to sex trafficking and drug dealing.
There are speculations that Bitfinex raised $1 billion to compensate for the money that “went missing”. There’s a possibility that Bitfinex will buy back LEO worth $800 M from its investors over the period of a couple of months or will use profits from Bitfinex trading operations to collectively buyback the lost funds.
With the LEO announcement, a couple of Redditors spoke against Bitfinex and its LEO burn plan.
NotAnotherEmpire, a Redditor said:
“There’s nothing legal about it. It’s an unregistered offshore securities offering.
Seriously, these guys were engaged in bank fraud/money laundering on a massive scale (lying about account ownership/use) and as part of this have been outed as having misappropriated all client funds without their knowledge, mixing them with corporate assets. And then losing such because of the first issue.”
Segwithless, another Redditor said:
“Problem: Missing 800Million USD
Solution: Create and distribute more shit tokens
What could possibly go wrong here?”